First Eagle Alternative Credit’s Michael Herzig was featured on GlobalCapital’s Another Fine Mezz podcast in the first installment of its new CLO series. He provided insights on the resurging CLO market, highlighted the importance of aligning investor and manager interests, and reflected on the keys to success in his 30-plus years in the industry.

Listen to podcast

DEFINITIONS

Middle market lending are loans to typically U.S., companies with annual revenues above $100 million and below $3 billion and with more than 100 and less than 2,000 employees.

Direct lending is a form of corporate debt provision in which lenders other than banks make loans to companies without intermediaries such as an investment bank, a broker, or a private equity firm.

Broadly-syndicated loans (BSL) are the most common form of leveraged bank loans, i.e., loans supported by cash flows to finance mergers, acquisitions, and recapitalizations.

A collateralized loan obligation (CLO) is a single security backed by a pool of debt.

First lien loan is a type of legal debt that is secured by collateral and is paid back before all other debt holders, including other senior debt holders.

A bank loan is a loan made by banks or other financial institutions to companies and are usually senior secured debt.

SOFR or the Secured Overnight Financing Rate is a benchmark interest rate for dollar-denominated derivatives and loans.

An exchange-traded fund (ETF) is a pooled investment security that can be bought and sold like an individual stock. ETFs can be structured to track anything from the price of a commodity to a large and diverse collection of securities.

DISCLOSURES

Unless otherwise stated, all information contained in this material is as of May 22, 2024.

The opinions expressed are not necessarily those of the firm and are subject to change based on market and other conditions. These opinions are not intended to be a forecast of future events, a guarantee of future results, or investment advice. Any statistics contained herein have been obtained from sources believed to be reliable, but the accuracy of this information cannot be guaranteed. The views expressed herein may change at any time subsequent to the date of issue hereof. The information provided is not to be construed as a recommendation or an offer to buy or sell or the solicitation of an offer to buy or sell any security.

This material and the information contained herein is provided for informational purposes only, does not constitute and is not intended to constitute an offer of securities, and accordingly should not be construed as such. The information in this piece is not intended to provide and should not be relied on for accounting, legal, and tax advice.

Past performance does not guarantee future results.

All investing involves risk including the possible loss of principal.

Important Risk Information
Alternative investments can be speculative and are not suitable for all investors. Investing in alternative investments is only intended for experienced and sophisticated investors who are willing and able to bear the high economic risks associated with such an investment. Investors should carefully review and consider potential risks before investing. Certain of these risks include:
• Loss of all or a substantial portion of the investment;
• Lack of liquidity in that there may be no secondary market or interest in the strategy and none is expected to develop;
• Volatility of returns;
• Interest rate risk;
• Restrictions on transferring interests in a private investment strategy;
• Potential lack of diversification and resulting higher risk due to concentration within one of more sectors, industries, countries or regions;
• Absence of information regarding valuations and pricing;
• Complex tax structures and delays in tax reporting;
• Less regulation and higher fees than mutual funds;
• Use of leverage which magnifies the potential for gain or loss on amounts invested and is generally considered a speculative investment technique and increases the risks associated with investing in the strategy;
• Carried interest which may cause the strategy to make more speculative, higher risk investments that would be the case in absence of such arrangements; and
• Below investment-grade loans which may default and adversely affect returns.

FEF Distributors, LLC (“FEFD”) (SIPC), a limited purpose broker-dealer, distributes certain First Eagle products. FEFD does not provide services to any investor, but rather provides services to its First Eagle affiliates. As such, when FEFD presents a fund, strategy or other product to a prospective investor, FEFD and its representatives do not determine whether an investment in the fund, strategy or other product is in the best interests of, or is otherwise beneficial or suitable for, the investor. No statement by FEFD should be construed as a recommendation. Investors should exercise their own judgment and/or consult with a financial professional to determine whether it is advisable for the investor to invest in any First Eagle fund, strategy, or product.

First Eagle Investments is the brand name for First Eagle Investment Management, LLC and its subsidiary investment advisers. First Eagle Alternative Credit is the brand name for the subsidiary investment adviser engaged in the alternative credit business.

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