(Bloomberg) -- Apollo Global Management Inc.'s $25 billion retail-focused private credit fund secured new financing to play offense as investor jitters reverberate through the asset class.
With credit spreads widening, Apollo Debt Solutions, or ADS, obtained a $500 million credit line that it can use to snap up more loans at an opportune time, according to people familiar with the matter.
The turmoil ripping through private markets is presenting "some of the most attractive opportunities in a credit cycle," Apollo said in a letter to shareholders on Monday. The firm said ADS has $5.3 billion of immediately available liquidity.
The new credit line could provide funding for ADS to originate or buy new loans, and give it ample cash for an environment where redemptions remain high, the people said, asking not to be identified discussing non-public information. Executives are also weighing a potential deal to package loans from the fund's balance sheet into a bond sale to outside investors, the people said.
The new facility, known as Bald Eagle Funding, is overseen by lenders including
Representatives for Apollo,
Private credit funds have increasingly turned to CLOs in recent years as a way to finance themselves, with a number of them issuing the deals for the first time. Blackstone Inc.'s flagship private credit fund, called BCRED, is among the managers that recently issued such a deal, though unlike the Apollo deal, it was first planned months ago.
ADS, which has $25 billion of assets and $15 billion of net asset value, has previously issued four CLOs, according to data compiled by Bloomberg News. Its most recent deal — a roughly $700 million CLO issued in September — was split into eight separate tranches, plus a riskier equity piece.
Business development companies — a type of private credit fund for retail investors — have been forced to limit the amount of money that investors can pull, as worries mount about the market's lending practices and its investments in businesses vulnerable to artificial intelligence disruption.
ADS announced Monday that it has curbed redemptions at 5% of outstanding shares, giving investors 45% of the capital they requested back. Clients sought to redeem 11.2%, according to the shareholder letter. It became one of the latest alternative asset managers to be hit with redemption demands that surpass the typical limit of 5% of outstanding shares per quarter.
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