The fresh 52-week high in the U.S. 30-year Treasury bond is creating chaos in interest rate-sensitive sectors. Utilities, dividend income, and private credit stocks are sharply lower, with a high correlation to bond yields.
Private credit stocks are growing especially risky. What is the downside potential if yields continue to rise? The 30Y bond yield topped around 5.63% on September 30.
BlackRock (BLK) may withstand the weak bond market. The firm disclosed on Sept. 11 withdrawal requests for its private credit funds. HPS Corporate Lending Fund received requests of around 11.5%. That was below the 13.3% rate it experienced in the second quarter.
Ares Capital (ARES) shares hovered near its 52-week low. Despite a low valuation at a forward price-to-earnings multiple of 20.4 times, the stock is in a downtrend. Still, easing redemption requests should lower the risk of Ares facing illiquidity issues for its private credit.
Apollo (APO) has $15 billion in assets managed for its debt fund. In September, redemption requests fell from 16.8% to 14.7%.
Brookfield (BN) and Brookfield Asset Management (BAM) shares are disappointing investors. The share price for both firms neared its 52-week low on Tuesday. On Sept. 21, Brookfield priced a $600 million public offering of senior notes due in 2031 at 5.65%. While BN stock struggled, that low yield is a low interest rate, near that of U.S. Treasury bonds.
That indicates the debt market has confidence in Brookfield’s debt.
