Marks says Oaktree had $10 billion ready when Lehman collapsed and most thought the financial world would melt down.
“We had $10,000,000,000 sitting on the shelf. Lehman goes under. Most people think the financial world is gonna melt down. Question is whether you spend the money.”
Marks says Oaktree had raised $10 billion for distressed debt by September 2008, three times the prior record.
“When Lehman Brothers went bankrupt in mid September of o eight, we had raised the biggest distressed debt fund in history by a factor of about three. We had $10,000,000,000 sitting on the shelf.”
Marks reveals Oaktree raised ten billion dollars for distressed debt before Lehman collapsed, three times larger than any prior fund.
“When Lehman Brothers went bankrupt in mid September of o eight, we had raised the biggest distressed debt fund in history by a factor of about three.”
Marks says Oaktree raised fund targeting $3 billion but got $8 billion in orders within a month.
“And the biggest fund in history was $2,500,000,000 That was our 'one fund for. And so we went out to raise $3,000,000,000 and within a month we had orders for eight.”
Marks describes buying senior debt at 15-20% yields where company could fall 75% without loss.
“these great buyout firms bought a company for $4,000,000,000 and now we are we can buy the senior most debt at a yield of, I don't know, let's say 15 or 20%, such that if the company ends up being re worth $1,000,000,000 we won't lose any money.”
Marks bought senior debt at prices profitable even if companies worth one-fifth of buyout valuations.
“we were buying the senior most debt of these companies at prices such that if these companies ended up being worth a third or a quarter or a fifth of what these great buyout firms had bought them for a year or two ago, we would be okay.”