Amend and Pretend: Private Credit’s Hidden Defaults (w/ Tuck Hardie, Houlihan Lokey)
Devin Mathews speaks with William Tuck Hardie, Managing Director in Houlihan Lokey's Financial Restructuring Group, about why corporate defaults remain deceptively low despite persistent macro chaos. They break down the mechanisms of liability management exercises (LMEs), amend-and-extend transactions, and payment-in-kind (PIK) interest, explaining how private credit and private equity fund dynamics incentivize can-kicking ahead of the 2028–2030 debt wall.
- Borrowers and private credit lenders are pushing debt maturities out to 2028 and 2030 to bypass volatility around the US presidential election. Read →
- Liability management exercises shifted from sponsor-driven priming battles to defensive lender pacts, with creditor cooperation agreements emerging across syndicated loans within the past three years. Read →
- Pure mathematical finance dictates that when debt is impaired by a single penny, equity value is zero, yet direct lenders routinely leave wiped-out sponsors in full operational control. Read →
- William Tuck Hardie of Houlihan Lokey explains that formal defaults stay rare because private credit lenders and private equity sponsors are both fundraising and refuse to mark down impaired capital. Read →