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Ryan Daniel

9Questions is our Q&A series featuring key decision-makers in the corporate credit markets — get in touch if you know who we should be talking to!

Deborah Cohen Malka is a partner and portfolio manager at AlbaCore Capital Group, where she sits on investment committees across public and private credit markets. She previously worked at Goldman Sachs, CCMP Capital and CPPIB.

Cohen Malka talks on tight technicals, reuniting with old colleagues and re-discovering an old pastime!

1. There's a lot of complaints in the high yield and leveraged loan markets around a lack of new money deals — how would you describe the technical picture?

We are seeing a very strong year in terms of inflows in both leveraged loans and high yield. Year-to-date, European high yield funds have recorded over €12bn in inflows, which is approximately six times higher than the same period in 2023. Similarly, the CLO market, which represents roughly 70% of the European leveraged loan market buyer’s base, has also seen record levels of new issuance with €45 billion of new issuance as of mid-November.

Driven by this strong demand, leveraged finance activity has increased this year, with European institutional loan volumes reaching €57bn by the end of September. However, this issuance has been mainly dominated by amend-and-extend activity, repricing and refinancings rather than new money deals.

As a result of this supply-demand imbalance, we’ve seen a strong technical bid for paper throughout the year. On a more constructive note, we’re expecting a noticeable pick-up in M&A activity which should help steady the supply-demand dynamic.

2. So, what makes you confident about an increase in M&A next year?

As rates stabilise, particularly in Europe, and with financing readily available, this should encourage increased activity. The outlook for growth in Europe, while modest, is also improving, with forecasted EU GDP growth of 1.5%. Combined with continued low default rates, we believe that we should see a resumption of ‘normal’ PE liquidity levels, especially given that outstanding dry powder for PE funds in Europe is approaching $400bn.

3. Does that make you feel optimistic as a European credit investor?

With inflation stabilising and Europe showing slow growth alongside a low default rate, we remain constructive on European credit. However, geopolitical challenges and the maturity wall due in 2027-2028 are leading to further dispersion between credits. We expect this trend to continue and potentially become more pronounced as the new maturity wall approaches.

4. What are you seeing as the biggest risk for European LevFin markets?

While the maturity wall has been healthily pushed out to 2027-2028, many underlying capital structures established during a lower interest rate environment have not yet been addressed. As a result, some companies remain overlevered and might not be able to grow into their capital structures before these maturities need to be refinanced. This will lead to greater dispersion and could result in additional stressed situations. More generally, companies are under pressure to integrate AI into their processes and ensure they are at the forefront of their markets; we believe there will be winners and losers in credit of GenAI integration.

5. Let's hear about your journey so far — and how has that prepared you for your role at AlbaCore?

I began my career as an M&A banker at Goldman Sachs, where I worked for a few years before venturing briefly into private equity. Eventually, I joined my current partners in investing in credit at CPPIB. In 2016, we left CPPIB to start AlbaCore.

I always considered M&A a strong training ground in finance; you see a variety of transactions and helps you develop technical skills, particularly in modelling and analysis. It was also a great experience where I met a number of very talented people, many of whom I still work with today. Some of them have become colleagues again years later — for instance, our new head of direct lending, Luke Gillam, who joined AlbaCore in October.

My previous experiences have definitely led me to approach businesses with an open mind in terms of capital structure, and I believe the ability to invest across the capital structure allows you as an investor to find good relative value opportunities.

6. What do you think sets AlbaCore aside from most credit shops?

With the recent addition of our dedicated senior direct lending strategy, I believe we’ve become one of the few standout, Europe-focused, specialist credit-only shops with the ability to invest across the capital structure and provide comprehensive solutions for sponsors.

7. As competition between syndicated markets and private credit intensifies, what’s next?

While we have seen some convergence between the syndicated market and private credit, and we are certainly seeing companies transition between the two markets, the specific demands of their respective investor bases will mean that some transactions will be more naturally suited to one market versus the other. To take the example of delayed draws, while we have seen some syndicated loans issued this year offer delayed draw facilities, these are much more limited in nature than those seen in the private credit market, where delayed draws are very common.

8. What kind of deals will work best for private credit markets — and where do syndicated markets have the upper hand?

Private credit tends to work best when there is a need for sterling-denominated or other non-euro currency financing, as the broadly syndicated loan market is primarily driven by euro-denominated CLO demand. Additionally, big acquisition facilities or transactions with very long signing-to-closing periods work better for private credit versus syndicated markets, given the requirement for CLOs to be funded. However, for very large transactions in EUR across a variety of sectors, the BSL market, when functioning, can be more efficient.

9. In your free time, we hear you've rediscovered playing the piano — tell us more!

My five-year-old daughter recently started taking piano lessons, and seeing her, I have decided to resume playing after a 20-year hiatus. I was surprised to see how muscle memory works, as pretty quickly I was able to play some old pieces from memory, but more importantly, it is a very good way to escape and take a step back during the week.

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