King Street Capital Management's Brian Higgins on risk-reward in the market

Market Overview & Risk Reward - Stated index is at multi-decade lows, while many companies need additional capital [2] - Dispersion is key to risk reward in the current market [2] - Private credit market default rates are low, but rise to 3-4% when including liability management exercises and out-of-court restructurings [4] - Traditional high yield credit has a 3% average default rate and $0.40 recovery rate, but recovery rates have decreased due to out-of-court restructurings [5] Private Credit Market - Private credit market is a multi-trillion dollar market with numerous opportunities [4][6] - Private credit often has stronger covenants compared to the broader syndicated loan market [8] - Overall corporate leverage and specific sectors are important considerations [8] AI & Technology - AI is in early stages, with only 5% of companies generating revenue [10] - There will be winners and losers in the AI space [12] - Software companies face challenges regarding moats and unique protectable aspects [15] - Enterprise customers are taking their time with cloud adoption, impacting software [15][16]