Independent Thinking^®

Q&A with Apollo Asset Backed Credit Company

Editor’s note: Asset-backed credit is an important and growing asset class. Here we interview Michael Paniwozik, president of Apollo Asset Backed Credit Company, or ABC, one of the carefully selected outside fund managers that supplement the core capabilities of Evercore Wealth Management. Please note that the views of the external managers interviewed in Independent Thinking are their own and not necessarily those of Evercore Wealth Management.

Q: Let’s start at the beginning. What is asset-backed finance, exactly?

A: Asset-backed finance is a critical tool for financing the day-to-day activities of millions of businesses and consumers globally. It encompasses a broad set of credit types that touch everyday life, from residential mortgages, credit cards and student loans, to planes, trains, automobiles, sports and entertainment royalties, and more.

This asset class can provide investors with downside protection through credit enhancement and structural safeguards, as well as diversification and yield at the investment and portfolio levels.

Q: How does Apollo approach asset-backed finance?

A: ABC affords investors access to high-quality asset-backed instruments across a diverse range of sectors, providing yield in excess of publicly traded credit of comparable quality.

Our proprietary sourcing engine – along with disciplined “purchase price matters” investment philosophy and the scale and diversity of our capital base – allows for access to a differentiated risk/return profile within private credit. The breadth of our offering across all different types of asset-backed risk enables us to invest in all market conditions.

Q: Why is that important?

A: Our asset-backed investments offer access to diversified collateral pools across unique and idiosyncratic asset classes. This differentiation makes asset-backed finance particularly impactful, as its performance is generally less correlated to corporate credit, delivering attractive diversification and enhancing portfolio resilience.

Unlike allocations to direct lending, which from a risk standpoint compares to single-B/high-yield risk, private asset-backed credit is predominantly investment grade or investment grade-like. About 80% of the portfolio is investment-grade or IG-equivalent, with de minimis subprime exposure. Our investors use ABC as a replacement for or complement to public fixed income exposures. Zero portfolio-level leverage further enhances downside protection and reduces forced selling risk.

Q: What is your impression of the scale of this opportunity?

A: The asset-backed finance, or ABF, market is massive, with around $20 trillion in market size globally. This makes it much larger than the circa $3 trillion public/private leveraged corporate credit markets. It is experiencing the same type of de-banking that we have seen with corporate finance, creating opportunities for non-bank financial institutions like Apollo to access the underlying assets and structure private ABF loans. Private ABF loans can offer 1% to 2% premium in spread/yield versus both public ABF and public corporate credit on a ratings- and duration-matched basis.

Q: Why do you believe the ABC is particularly well placed to take advantage of this opportunity?

A: ABC is a semi-liquid, turnkey solution that provides investors access to high-quality, asset-backed instruments across a diverse range of sectors, aiming to provide yield in excess of publicly traded credit of comparable quality. We seek to invest in what we believe will be the most attractive risk/return opportunities across the five major categories of the asset class, focusing primarily on directly originated investment grade or equivalent assets.

And of course, ABC benefits from the Apollo ABF Platform’s broad origination channels. The firm has been investing in asset-backed credit for over 16 years and now has more than $312 billion deployed. We have 30-plus direct sourcing platforms and partnerships with 4,000 employees working on various asset-backed risks every day. We originate approximately $75 billion annually in asset-backed finance across some 50 asset classes and have material skin in the game with strong alignment with our investors.

Q: What is your outlook now?

A: We believe private markets remain an attractive alternative due to their resiliency, lower volatility and lower correlation to public markets. Public markets tend to experience extreme price movements when liquidity evaporates. Private markets are priced upon the fundamentals and financials, mitigating the lack of liquidity and discounts.

It’s also worth noting that ABC’s holdings are backed by thousands of underlying borrowers across sectors and geographies, reducing idiosyncratic risk. With broad exposure across five asset-backed pillars, ABC avoids overconcentration and has minimal direct sensitivity to tariff-impacted sectors.

For further information, please contact Evercore Wealth Management Partner and Portfolio Manager Stephanie Hackett at [email protected].