Interest Rate Transition Opportunities

Executive Summary

The Federal Reserve's "higher-for-longer" stance is creating the largest credit dislocation since 2008, with $4.7 trillion in corporate debt facing refinancing challenges through 2026. Sophisticated credit investors can generate 15-25% returns by providing liquidity to quality borrowers trapped by rate timing.

The Interest Rate Time Bomb

Imagine thousands of homeowners who got adjustable-rate mortgages when rates were 2%, and now they're resetting to 7-8%. Many good homeowners with solid incomes suddenly can't afford their payments—creating opportunities for those with cash to help.

The Refinancing Wall:

• $1.8 trillion in corporate bonds maturing 2025-2026
• $2.9 trillion in leveraged loans requiring refinancing
• Average rate increase: 400-500 basis points vs. original financing

Distressed Opportunities by Sector

Real Estate Investment Trusts (REITs):

• $347 billion in floating-rate debt causing cash flow pressure
• High-quality properties with temporary financing issues
• Preferred equity opportunities at 12-15% yields

Private Equity Portfolio Companies:

• $892 billion in leveraged buyout debt refinancing required
• Strong operational businesses with capital structure problems
• Direct lending opportunities at 200-300bp premium to historical norms

Growth Technology Companies:

• Venture debt maturation coinciding with reduced equity availability
• Revenue-based financing becoming attractive alternative
• Asset-based lending against IP and recurring revenue streams

Credit Investment Strategies

Direct Lending Platform:

• Provide replacement financing for bank departures
• Target $25-100M facilities for mid-market companies
• Pricing: Prime + 400-600bp with equity kickers

Distressed Debt Acquisition:

• Purchase performing loans at discounts from constrained sellers
• Focus on asset-heavy borrowers with temporary liquidity issues
• Target 20-30% total returns through discount capture and yield

Structured Credit Solutions:

• Preferred equity with conversion features
• Revenue-based financing for recurring-revenue businesses
• Sale-leaseback arrangements for real estate-heavy companies

Market Outlook

Credit dislocations typically last 18-24 months, providing attractive entry points for patient capital. We anticipate deploying $2-3 billion across credit strategies, targeting blended returns of 18-22% in current environment.

About YanneCapital

YanneCapital is a multi-strategy investment firm managing $8.7 billion across private markets, credit, and strategic opportunities. Our research-driven approach identifies market dislocations and structural changes creating superior risk-adjusted returns for institutional investors.

Investment Strategies:

• Private Equity & Growth Capital
• Credit & Distressed Opportunities
• Infrastructure & Real Assets
• Cross-Border M&A
• ESG Transition Investing

For institutional investor inquiries: ir@yannecapital.com

All analysis based on proprietary research and public market data. Past performance does not guarantee future results. Please consult qualified financial advisors before making investment decisions.