Oaktree's Marks Sees 'Great Bargains' Coming as Recession Looms

Oaktree Capital Group LLC co-founder Howard Marks is gearing up for one of the best buying opportunities since the global financial crisis as higher interest rates and a looming recession push more companies into distress.

After settling for “moderate” returns partly due to cheap credit in the past few years, the Los Angeles-based firm with about $163 billion in assets is looking to finance those companies struggling to repay debt.

“Now our time is coming back,” he told investors in Singapore this week and in a subsequent interview with Bloomberg News.

Marks predicts US inflation has likely peaked, and expects rates to stay near the 5% mark in the next 5 to 10 years. An accompanying shift in consumer appetite alongside higher borrowing costs will lead to “significant distress” at many companies, he said.

“A year ago the outlook was considered flawless and I think we’re going to reach a point where they consider it hopeless,” he said of investors. “And that’s when you get the big buys. That’s when you get to be a buyer of assets cheap and a maker of loans at high yields with safety.”