Monetary Matters with Jack Farley Is the Age of Reckless Lending Coming To An End? | Oaktree’s Raghav Khanna on Private Credit, Software, and How Oaktree Correctly Saw First Brands' Red Flags
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Feb 1, 2026 
Raghav Khanna, Managing Director at Oaktree specializing in private debt and structured credit, breaks down modern lending risks. He discusses how Oaktree spotted First Brands' red flags. Short takes cover underwriting beyond KPIs, pitfalls of adjusted EBITDA, PIKs masking stress, risks in software/SaaS, and how private credit vintages and liquidity dynamics are evolving.
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Underwrite Cash, Not Just Adjusted EBITDA
- Do dig past adjusted EBITDA and build cash-EBITDA from the cash flow statement to spot overstated earnings.
- Do speak with suppliers, customers, and former employees to surface non-KPI red flags.
PIK And Shadow Defaults Mask Real Stress
- Shadow defaults and PIK conversions rose and peaked around 2024, signaling hidden stress beyond headline non-accruals.
- Treat significant migrations from cash pay to PIK or combined PIK-plus-maturity-extensions as de facto defaults.
2020–21 Vintages Drive Much Of Today's Stress
- Many stress cases trace to 2020–21 vintages that added high floating-rate leverage when rates were near zero.
- Later vintages have generally performed better because underwriting adjusted for the new rate regime.