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Blackstone’s Credit Division Impacted by Falling Commodity Prices

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Returns were impacted

In 2Q17, Blackstone Group (BX) had a gross return of 1.5% in performing credit and a gross return of -1.2% in distressed strategies. That negative gross return was mainly due to the downward trend in commodity prices for its energy portfolio. However, on an LTM (last 12-month) basis, distressed strategies had a gross return of 15.3%. On an LTM basis, performing credit returned 16.6%.

Blackstone’s (BX) AUM (assets under management) for its credit division in 2Q17 was $94.5 billion, which was a rise of 12.0% YoY (year-over-year). Over the last 12 months, the division has launched ten CLOs (collateralized loan obligations) amounting to $5.7 billion. Of the $5.7 billion, $2.0 billion was launched in 2Q17. The company’s credit division has also witnessed a 12.0% rise YoY in its fee-generating AUM, which was $72.4 billion in 2Q17. In the same period, Blackstone’s credit division fell 35.0% YoY in total revenues to $172.0 million. In 2Q17, the division’s economic income was $62.3 million, reflecting a substantial fall of 51.0% YoY.

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Target prices

Market analysts have given Blackstone (BX) a one-year price target of $38.68, which is a rise of ~12.0% from its current price. Alternative asset managers (XLF) have the following one-year price estimates:

  • KKR & Co. (KKR): $22.42
  • Carlyle Group (CG): $22.86
  • Apollo Global Management (APO): $30.50
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