Episode summary
Kieran Goodwin – Private Credit Concerns (EP.494)
Capital Allocators with Ted Seides
· · Hosts: Ted Seides · Guests: Kieran Goodwin
Summary
Kieran Goodwin traces his path from Duke computer science and early interest rate derivatives into decades of credit trading, emphasizing that his edge came from understanding bond math, options, and the basis between cash bonds and CDS. He says the move from sell side to buy side changed everything: portfolio construction, exit planning, and the need to be intentional about liquidity and bid-offer costs.
He describes King Street as the place where his derivatives background met fundamental distressed investing, and says that combination worked especially well through volatile periods like the mini default cycle, subprime, and the GFC. He also discusses why he left, how a later hedge fund launch taught him painful lessons about taking in capital too quickly and stretching beyond his comfort zone, and why he eventually stepped away again.
The second half focuses on private credit. Goodwin argues that rapid growth in non-traded BDCs and interval funds has recreated asset-liability mismatches, with retail investors, quarterly liquidity promises, leverage, and marks creating potential reflexive stress. He thinks the best managers will combine strong underwriting, tighter liquidity sleeves, accurate marks, and better communication, while Saba looks for opportunities in discounted secondaries and stressed liquidity situations.
Key takeaways
- Goodwin says asset-liability mismatches are the core risk in private credit and can turn into liquidity crunches and credit crunches.
- He believes non-traded BDCs and interval funds have grown too fast for the sophistication of parts of the private wealth channel.
- He argues good risk management means more liquidity, fewer unfunded commitments, and more transparent marks and disclosures.
- Goodwin sees opportunity for Saba in discounted private credit liquidity events, including secondary purchases below NAV.
- He thinks a software-heavy private credit shakeout is plausible because AI and capital misallocation could drive more defaults.
Notable quotes
“asset liability mismatches cause liquidity crunches and liquidity crunches can cause credit crunches. Credit is correlated when it gets stressed”
“you have to be much more intentional. You have to come into the day with a plan”
“The draw down fund has got the best asset liability mismatch”
“there is a potential for a non-traded BDC to work with the right private wealth client”
“The bar you can't really gate. You have to give the 5%”
How the episode opens
I've looked throughout my career for asset liability mismatches and I truly believe that asset liability mismatches cause liquidity crunches and liquidity crunches can cause credit crunches. Credit is correlated when it gets stressed. the bare case which I'm not saying it's going to happen but what happens is you get redemptions you get some real defaults you get for selling of private credit and in the interval funds you just run out of what's liquid and the bar to gate is really high that goes on a feedback loop of where's the actual bid for private credit it's hard to Today, I'm Ted Sides and this is Capital Allocators.
My guest on today's show is Kieran Goodwin, partner at Saba Capital, a $6 billion hedge fund manager that seeks to identify dislocations in credit and equity markets to generate convex returns in volatile times. Kieran has been one of the top credit traders on the street for the last three decades across roles in investment banks in the9s and early 2000s, King Street, his own hedge fund, Panning Capital, and most recently Saba that he joined in 2024. Our conversation covers a tour of Kieran's background, including early experience with credit derivatives, growth at King Street, lifespan of panning, downtime between stints, and re-engagement with Boaz Weinstein at Saba.
We then turn to risks in the private credit market, including its rapid growth, asset liability mismatches, pricing marks, leverage, liquidity, default risk, and the potential for reflexive problems. Kieran shares how managers should navigate the environment and how he's positioning Saba to benefit. Before we get going, after a long winter, we're starting to see green shoots in the changing of the season.
Spring training for baseball, March Madness for basketball, and the sunshine double in tennis all remind us that hope springs eternal.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- private credit risks
- asset-liability mismatches
- pricing marks
- liquidity and leverage
- reflexive market problems
Companies and tickers mentioned
- Saba Capital
- Thema
- King Street
- Panning Capital
Watch the episode
Watch “Kieran Goodwin – Private Credit Concerns (EP.494)” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Capital Allocators with Ted Seides, this episode and its artwork belong to Ted Seides – Allocator and Asset Management Expert. Octagon is not affiliated with the show; this page is an independent summary.
