Mike Arougheti, CEO of Ares Management, rejected UBS's projection of a 15% default rate in private debt markets, calling the forecast 'absolutely wrong' at a New York conference. The clash highlights growing divergence in institutional views on leveraged credit risk amid economic uncertainty.
- Ares CEO Mike Arougheti rejected UBS's 15% private debt default forecast as 'absolutely wrong'.
- Ares’s current private credit default rate is below 1.2%, significantly below the 5% threshold viewed as problematic.
- Arougheti cited strong underwriting standards, covenants, and corporate balance sheets as key deflationary forces.
- The firm manages over $140 billion in private credit assets across U.S. and European middle-market companies.
- Market indicators like LQD and ^VIX have shown slight increases amid the divergence in default expectations.
- The debate underscores growing institutional disagreement on credit risk in leveraged loan and private debt markets.
Mike Arougheti, chief executive of Ares Management, publicly dismissed a recent UBS forecast predicting a 15% default rate across private debt portfolios during the Bloomberg Invest event in New York on March 3, 2026. Arougheti emphasized the strong underwriting standards and structural protections embedded in Ares’s private credit investments, asserting that current market conditions do not support such a dire outlook. The Ares CEO pointed to the resilience of corporate balance sheets and disciplined loan covenants as key factors limiting default risk. He noted that the private debt market, which includes leveraged loans and mezzanine financing, has undergone significant risk mitigation since the post-2020 volatility period, with tighter underwriting and more conservative leverage levels. While UBS cited macroeconomic pressures—including elevated interest rates and sector-specific dislocations—as drivers of the 15% forecast, Arougheti argued that the data does not reflect actual performance. Ares’s current default rate across its private credit portfolio stands below 1.2%, significantly under the 5% threshold many analysts consider a warning sign. The firm manages over $140 billion in private credit assets, with exposure concentrated in middle-market companies across U.S. and European markets. The disagreement has implications for investor positioning, particularly in high-yield credit and leveraged loan funds. Market indicators such as the LQD ETF and the CBOE Volatility Index (^VIX) have shown modest upticks in recent days, reflecting heightened concern. Meanwhile, crude oil futures (CL=F) remain stable, suggesting broader commodity markets are not yet signaling systemic distress.