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KKR Brushes Off Private-Market Blues; HSBC Hit by MFS Loss
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Welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Wednesday, May 6. In today's briefing, KKR executives downplay broader instability in private markets by asserting that the firm’s financial performance remains decoupled from the volatility currently facing the sector. And HSBC set aside $400 million to cover exposure to an alleged fraud involving the collapse of the U.K. mortgage lender Market Financial Solutions.
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KKR’s Scott Nuttall described perceptions of volatility in the industry as “disconnected from the lived experience,” during an earnings call Tuesday. Photo: Michael Nagle/Bloomberg News
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KKR Says Market Distress Is Overblown
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Managers of KKR sought to play down turmoil engulfing private-markets firms, as the New York firm beat analysts’ quarterly earnings forecasts.
The multistrategy asset manager on Tuesday reported a swing to a first-quarter profit with revenue from its insurance division more than doubling. Fundraising held up while the firm’s revenue from fees and deal profits grew.
“The fact is, perception of the volatility of our business and industry is disconnected from the lived experience,” said Scott Nuttall, KKR’s co-chief executive officer, on a call with analysts Tuesday.
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HSBC has been undergoing a broad organizational revamp. peter parks/Agence France-Presse/Getty Images
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HSBC Takes $400 Million Hit From Private-Credit Alleged Fraud
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HSBC set aside $400 million relating to an alleged fraud in private markets in the U.K., marring its quarterly results. Shares of the bank fell more than 5% in London.
HSBC gave few details beyond saying the provision reflected a “fraud-related, secondary, securitization exposure with a financial sponsor in the U.K.” People familiar with the charge said it was connected to Market Financial Solutions, a British mortgage lender that collapsed this year.
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Freshworks to Cut Hundreds of Jobs in Shift Toward AI Automation
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Freshworks will cut around 11% of its workforce, or roughly 500 employees, as the software company aims to automate more of its business using artificial intelligence.
The company said it will incur a charge of around $7 million to $9 million in the current second quarter tied to severance payments, employee benefits and related costs. The layoffs are part of a broader restructuring plan to streamline Freshworks's organization and product development process, which is expected to be substantially complete by the end of June.
—Elias Schisgall
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Fitch said it upgraded Argentina’s Long-Term Foreign Currency and Local Currency Issuer Default Rating to B- from CCC+. Photo: Reuters
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Fitch Upgrades Argentina With Stable Outlook
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Fitch Ratings said it was upgrading its rating on Argentina following the October elections that saw President Javier Milei emerge with a stronger popular mandate.
Fitch said Tuesday it upgraded the country's Long-Term Foreign Currency and Local Currency Issuer Default Rating to B- from CCC+, with a stable ratings outlook.
The rating reflects Argentina's structurally improved fiscal and external balances, progress on economic reforms, and improved prospects for FX reserve accumulation, Fitch said. In addition, Fitch expects the government will secure adequate financing to cover debt obligations.
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