The Master Investor Podcast with Wilfred Frost

The Private Credit Unwind Is Coming – Tony Yoseloff

35 snips

Mar 18, 2026

Tony Yoseloff, CIO of Davidson Kempner and specialist in opportunistic and distressed credit, discusses market parallels with the 1970s and early 2000s. He covers private credit’s boom and potential unwind, why software lending is vulnerable, event-driven arbitrage like the Warner battle, and why India’s credit market deserves attention. He closes with a rule about knowing in advance how you might lose money.

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INSIGHT

1970s Comparison Driven By Rate Shock And Concentration

Tony Yoseloff sees parallels to the 1970s and early 2000s driven by market concentration and large rate shocks.
He highlights a 550bp short-term rate rise in 2021–22 and narrow equity breadth as catalysts for a disruptive decade.

INSIGHT

Private Credit Is Priced For Lower Returns

Direct corporate lending has attracted massive capital and been mis-sold as a double-digit asset class.
Tony argues true default rates are already 5–6% and recoveries have steadily fallen, reducing long-term returns to mid-single digits.

INSIGHT

Loan Recovery Rates Have Declined Sharply

Recovery rates on first lien debt have fallen dramatically over 15 years, now near 36 cents on the dollar.
Tony contrasts that with 70–80 cents recoveries in the late 1990s, showing structural decline in creditor recoveries.

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Wilf sits down with Tony Yoseloff, executive managing member and CIO of Davidson Kempner, to explore how one of the world’s most enduring alternative asset managers navigates today’s markets. Tony, who manages around 40 billion dollars across opportunistic credit and event-driven strategies, shares his macro framework for the current environment, comparing it to both the 1970s and the early 2000s, and discusses how market concentration, rate shocks and a potential Iran-driven oil spike could shape inflation, interest rates, recession risk and the opportunity set in credit.

Tony also gives his take on the much-debated private credit boom and emerging unwind, and why he sees direct corporate lending as a only mid single-digit return asset class that has been oversold to investors. He thinks default rates have already risen to 5 or 6%, and reflects on which parts of private credit are most exposed, most notably software companies, which often lack hard assets to sell for recovery when things go south.

Tony reflects on the balance needed between art and science for event-driven investing, and uses the recent takeover battle surrounding Warner Brothers Discovery as a case study for how to arbitrage specific market events, and why it is attractive to investors to have exposure to investments with zero beta, and unrelated to the rest of their portfolio.

Tony also argues that US investors have become too inward looking, and shares why he thinks India is particularly attractive, especially for credit where it has been overlooked.

Tony closes with a piece of investing advice he uses internally: always know in advance how and why you might lose money, and size and select positions with that probabilistic reality in mind.

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