Bloomberg Intelligence: FICC Focus with Jim Fellows

Philosophy, process, people and performance. Jim Fellows, Co-President and Chief Investment Officer of First Eagle Alternative Credit (FEAC), joins hosts Noel Hebert and Sam Geier on this episode of Credit Crunch to talk through the value of culture, the evolution in direct lending, leveraged loans and CLOs, and why he wants credit to just be boring. We talk mid-market lending, the right risk premium between direct lending and syndicated markets, and how the FEAC team leverages technology to complement the investment process. All that and more. Credit Crunch is a part of the FICC Focus podcast series.

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DEFINITIONS

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

A syndicated loan is financing offered by a group of lenders—called a syndicate—who work together to provide funds for a borrower. 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.

EBITDA is earnings before interest, taxes, depreciation, and amortization and may be used as a measure of a company’s health.

Asset-based lending is the business of loaning money in an agreement that is secured by collateral. An asset-based loan is typically secured by inventory, accounts receivable, equipment, or other property owned by the borrower.

DISCLOSURES

Unless otherwise stated, all information contained in this material is as of March 23, 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.

his 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 and Napier Park are brand names for the two subsidiary investment advisers engaged in the alternative credit business.

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