The Ledger
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Danieli: Credit Diversification Requires Different Asset Types, Not Just Scale
“The fundamental problem isn't lending to software. The fundamental problem isn't doing sponsor backed loans. The fundamental problem Is that in the business of lending, you need a big diversified balance sheet, not only scale or diversification in the sense of…”
Danieli: Most investing alpha comes from portfolio and risk management
“My biggest investment pet peeve is when people focus only on the investments themselves. They forget that that's just one third the job. Most of the alpha in the business of investing, I believe, comes from portfolio management and from risk management. These …”
Danieli: Private credit will grow into a tens of trillions dollar market
“It's going to be a large space. It's not going to be a couple of trillion dollars. It's going to be tens of trillions of dollars.”
Danieli: Credit investing is about avoiding losers rather than picking winners
“We're trying to avoid losers, not pick winners, trying to basically filter out credit that's going to go wrong, or at least make it a very small incidence when it occurs.”
Danieli: MA Financial bans the word 'originator' to enforce accountability
“The investment team, by their nature, they're there to source investments, underwrite loans and positions. They're not originators. We've banned that word. We don't want them to just originate, throw it over the fence, and it's someone else's problem now. We w…”
Danieli: Specialty finance like legal disbursement has near-zero correlation to rates
“We have other exposures like our specialty finance books, legal disbursement funding, insurance premium funding that have almost no correlation to interest rates and unemployment.”
Danieli: Private credit will adopt bank-like origination in next 20 years
“What you'll see is that if you roll for 10 years, 20 years, This industry of private credit will be all about that model of proprietary styles of origination, not that dissimilar to what a bank looks like. You're just doing it with a slightly different capital…”
Danieli: Australian financial platforms have historically struggled to expand globally
“The history of Australian platforms going global isn't that good.”
Danieli: Credit managers must prioritize structural protections over macro forecasting
“It's predicting rain doesn't count. Building the arc does. It goes to this same idea of we can't crystal ball what's going to happen tomorrow. Got no idea where interest rates will go, what could happen, what could come out of left field that we're not thinkin…”
Danieli: MA Financial targets fixed income illiquidity premium, not equity returns
“And that's again, we're in the credit business. We're not in the equity business. We're not compounding returns, and we're not trying to do equity returns through debt. We're trying to deliver fixed income with a premium for trading off a bit of liquidity.”
Danieli: 'Star pickers' belong in equities, not private credit
“We try to avoid having people in a team and developing people that You want to be the star loan picker. In my view, that's for equities. We get compound returns, and you can have the 10 bag or upside. That's not our business. The people that thrive for us are …”
Danieli: Credit Stress Testing Must Target Discrete Micro Risks Over Macro Factors
“The macro stress testing, we thought about it a lot at the time of deal inception. How far can things fall in the world or the bad things happen before our capital is going to face an issue? Has the underlying business collateral or asset changed so that that …”
Danieli: Asian banking dynamics force non-bank lenders up the risk curve
“In other parts of Asia, that dynamic doesn't exist. We're often looking, the ambit of what banks can do in that market is wide, and whenever you're trying to compete with someone with such a low cost of capital, you just have to step up the risk curve.”
Danieli: Fund private credit from defensive allocations, not liquid credit
“This is a long-term investment asset class. This is not liquid credit. The way people should be thinking about private credit is, think about my portfolio. Let's use sixty-forty. The part that's 60 is for growth. Then there's the part that's 40, the defensive.…”
Danieli: MA Financial platform oversees $125 billion in managed loans
“We also have created this lending ecosystem, which is a large piece of financial infrastructure platform on which there's about a hundred and seventy-nine billion or one hundred and twenty five billion US dollars of managed loans on platforms.”
Danieli: MA Financial Credit Portfolio Is 60% Asset-Backed Facilities
“Our book is 60% asset backed facilities, 20% direct asset lending, and then 20% in the direct corporate lending, which includes sponsor backed direct lending.”
Danieli: MA Financial's lending platform touches 350,000 Australian customers
“That financial infrastructure business, not only a source of access, but a huge source of data, intelligence, lifetime access of what's happening in the markets, touches 350,000 customers in the Australian economy.”
Danieli: MA Financial stress-tests every loan to identify break points
“We've designed our credit philosophy around an approach we call what you have to believe. That's all about saying, every time we do a loan, we want to know where it breaks. Every loan, we want to know where you do lose money, even if it looks like a remote set…”
Danieli: MA Financial Flagship Funds Hold 1.4M Collateral Loans Across 98 Facilities
“Flagship funds that we run might have 246 positions for the positions that are the asset based finance, which I think is today 98 different facilities. There's 1.4 million underlying loans and receivables that represent the collateral of those loans.”
Danieli: MA Financial invested $240M of internal capital into its funds
“We've spent hundreds of millions of dollars of our own money building out that ecosystem. On top of that, we've invested heavily, two hundred and forty million dollars of firm and staff capital in the funds to show alignment, skin in the game in what we're doi…”
Danieli: 75% to 80% of Australian loans originate through brokers
“Today, 75 to 80% of loans in Australia don't go by someone going to a lender directly. They go through an intermediary, a broker.”
MA Financial assigns independent red teams to every deal before investment committee
“Every time we're taking a deal to an investment committee, we assign some people to be our red team. This is basically taking someone from the investment portfolio team, importantly, not working on the deal.”
MA Financial runs quarterly recession war games on all portfolio loans
“We do these things called war games now every quarter where we simulate recessionary scenarios, moderate, severe, and a crisis scenario on all our loans in our book.”
Danieli: Credit risk must be managed, structure controlled, and fraud avoided
“We're always thinking about credit risk, which you need to manage, structure risk, which you need to control, and fraud risk, which you need to avoid, totally.”
Danieli: Red teams alter MA Financial deal terms 25% to 30% of the time
“The changes happen regularly around deal structures and term. It might be 25 to 30% of the time, pretty regularly, that that's causing changes to the structure.”
Danieli: MA Financial Avoids Direct Sponsor-Backed Lending in the US
“We're not trying to do direct sponsor-backed lending here in the US. What we've done is to apply an asset-based finance way of thinking to get some exposure to that sector.”
Danieli: MA Financial Remains One-Third Staff Owned Post-Listing
“While we're listed, we're still a third owned by staff.”
Danieli: Moelis Australia held 50% post-GFC market share in restructuring advisory
“In particular, in the post-financial crisis era, the platform in Australia had about a 50% market share advising on these situations, the recapitalizations occurring from that post-GFC era through to today”
Danieli: Australia's Big Four Banks Historically Controlled 80% of Lending
“There's the big four banks in Australia, and if you go back, they controlled 80% of lending.”
Danieli: Australian superannuation manages $4T across institutional and self-managed funds
“That's about four trillion dollars today. It breaks down about 75% into large institutional-style funds and about a trillion dollars in self-managed funds, which are for high net worth individuals or high income earning professionals.”