Jim Vanek, Partner and Co-Head of Global Performing Credit at Apollo Global Management, shared his insights during a discussion hosted with Alex Bogdanovskij, Investment Advisor at CMB Monaco, on the evolving role of private credit in today's portfolios.

 

Why do size, scale and underwriting discipline matter most in periods of stress and uncertainty?

Jim VANEK: In benign markets, capital can become a commodity. But when volatility increases, the differences between lenders become more apparent. Size and scale, for instance, tend to manifest first through diversification (across sectors, sponsors and borrowers) which can help cushion more isolated shocks. They also influence access whereby larger, more established platforms may see a broader range of opportunities, can be more selective, and are often in a position to lead transactions and shape terms rather than follow them.

There is also a stability dimension. Managers with deeper, more permanent capital bases and established funding lines are generally less exposed to liquidity pressures at precisely the wrong moment. That can allow them to support fundamentally sound borrowers through periods of disruption and to deploy capital into new opportunities as pricing and structures become more attractive.

Similarly, underwriting discipline becomes critical. Periods of stress tend to expose the vulnerabilities of deals struck in more accommodative environments (whether through higher leverage, weaker covenants etc.). Managers, like Apollo, that have consistently focused on seniority, conservative structures and realistic downside scenarios are typically better positioned when conditions shift. In that sense, discipline is less about caution and more about ensuring resilience through the cycle.

 

What role should direct lending and private credit play in a well-constructed portfolio today?

Alex BOGDANOVSKIJ: Private credit has evolved from a niche allocation into a core component of many portfolios. The asset class has matured, and the yield premium over public fixed income remains attractive on both an absolute and relative basis. At the same time, innovation in fund structures has made it accessible to a broader range of investors. Beyond yield, private credit offers clear portfolio construction benefits: typically lower volatility and correlation to public markets, the ability to generate regular income, and access to a wider opportunity set. For investors with a medium- to long-term horizon, these characteristics can be genuinely additive.

However, as the asset class has grown, dispersion between top- and bottom-quartile managers has widened - arguably more so than in public credit. Selectivity and a strong focus on manager quality are therefore critical.

 

What differentiates Apollo’s approach to sector selection, structuring and downside protection?

Jim VANEK: Our starting point is to be selective about where we takes risk. The firm focuses its direct lending on larger, established businesses with established earnings, often in sectors where visibility on cash flows is high and there is a clear strategic rationale for private financing. That means deploying into areas where scale, market position or recurring revenue support resilience, and being cautious in more speculative or structurally challenged parts of the economy.

Sector selection is reinforced by the breadth of Apollo’s broader credit and private markets platform. Sector Analysts bring a deep information set to each underwriting decision, and this cross‑platform perspective can be particularly valuable in identifying where fundamentals and pricing have diverged, and in avoiding situations where the risk/reward has become more asymmetric.

On structure and downside protection, Apollo’s bias is straightforward: first‑lien, senior secured exposure, conservative leverage and strong documentation. The firm typically seeks robust covenant packages, meaningful equity cushions beneath the debt, and collateral structures designed to preserve value in downside scenarios, not just in base cases. Active monitoring and the ability to engage early with sponsors and management teams round out the approach. Taken together, these elements are intended to make outcomes more a function of credit work and structure, and less a function of market sentiment.

 

Are we witnessing a cyclical reset or a structural shift in private credit markets?

Alex BOGDANOVSKIJ:  The truthful answer is probably both, although the structural story is more relevant for long-term investors.

The cyclical reset is largely behind us. Some 2021–2022 vintages were underwritten aggressively in a low-rate environment and came under pressure as rates rose. That adjustment has been relatively orderly and, if anything, has reinforced underwriting discipline across the market. In that sense, it reflects a healthy self-correction. The structural shift is what makes private credit particularly compelling over the long term. The opportunity set is broader than it was a decade ago, manager quality has improved, and the range of instruments provides greater flexibility to position portfolios across the risk spectrum.

Private credit is now a more mature and competitive market; one where sourcing, credit discipline, and manager expertise will ultimately determine outcomes.