Ares Management Corporation Class A Common Stock Barclays 24th Annual Global Financial Services Conference

Happy to be here. In the darkest conference room I think I've ever spoken before.

Yeah, look, we're seeing continued fundamental strength in pretty much everything that we own. If you were to look at the middle market corporate portfolios, which I think is a pretty good representation of the real economy, as we reported last quarter, EBITDA growth year-over-year for that portfolio is about 9%. Credit metrics are still very strong when we look at interest coverage, well above 2 times. You look at where we sit on a loan-to-value basis, non-accruals and defaults well below historical averages. Tone in the boardroom is strong. Deal activity is picking up, so it feels pretty good out there. I think the reality when you look around the world, there are a lot of secular tailwinds, whether it's the AI CapEx that we're seeing globally.

When you look at the Eurozone and places like Canada, there's a move towards what we would call strategic autonomy, rearmament, investments in energy security. So there's just a lot right now, despite some of the headwinds that people are talking about in terms of rate hikes, et cetera. The fundamentals are still really strong.

Yeah, look, we're the largest direct lender in the market, so I think we may experience the competitive dynamic differently than many. Just to put it in perspective, we have close to 350 investment people in the U.S. and Europe that are executing on that core direct lending business. When you just look at the amount of capital that we raise, the amount of capital that we're able to deploy, the origination and information advantages are pretty significant. So anytime you ask me this question, I'm going to largely tell you that we feel good about our ability to deploy the capital that we're raising into really attractive opportunities. That's true now. What has happened, because of some of the slowdown in retail capital raising, particularly for some of our larger competitors, we've actually seen a pretty meaningful improvement in terms for new transactions.

Spreads today are probably 25 to 50 basis points higher than they were a year ago. Upfront fees or original issue discount, OID, is about 50 to 100 basis points more than it was. Leverage levels are probably a half a turn to a turn better than they were a year ago. As importantly, the deal structures in terms of covenants and documentation have meaningfully improved as the market has shifted to a little bit more of a pro-lender versus pro-borrower positioning. We continue to see, I would say, normal levels of competition. Interestingly, at the upper end of the markets that we play in, and you and I have talked about this, one of the things I think that differentiates us, in addition to the size and scale and the track record, is that we actually play across the full spectrum of company size.

You'll see us in any given quarter finance a company with $5 billion of EBITDA all the way to maybe a couple billion. The relative value opportunity shifts between the different parts of the market. I would say today, because of some of the capital dynamics, we're seeing better relative value and less competition at the upper end of the market than we are at the lower end of the market, where you still have a number of players that are looking to deploy. Not to say that that's all that relevant, but there's definitely a noticeable shift just given some of what we're seeing in the capital flows.

I want to comment on one thing you just mentioned, though, before I give you the view on deployment.

Please I do think there's a misconception that our deployment is reliant on new transaction activity.