Bloomberg
Apollo Global Management is exploring a larger role financing debt-laden governments and the state-backed companies that serve them, betting that heavily indebted countries, particularly in Europe, will increasingly turn to private capital to plug widening budget gaps.
Speaking on Bloomberg Television in London, Apollo President Jim Zelter said governments are starting to see private capital as “part of the solution” to their mounting debt burdens, rather than viewing alternative asset managers as a last resort reserved for distressed situations.
One approach Apollo is examining involves strengthening the balance sheets of government-backed businesses through long-term capital commitments, potentially by transferring hard assets into a subsidiary structure that could then independently raise financing against those assets, separating a state-backed entity’s borrowing capacity from the sovereign’s own balance sheet.
Zelter framed the opportunity as a structural mismatch between rising government financing needs and the capacity of traditional lenders to meet them. European governments in particular face growing demands for capital, he said, at a moment when the region’s banking, investment and pension systems aren’t adequately equipped to absorb that financing on their own, leaving an opening that firms like Apollo are positioning to fill.
The move would extend Apollo’s push deeper into private credit, an area the firm has already been expanding aggressively, including a recent rollout of daily pricing across its roughly $850 billion credit business. Government and government-backed lending represents a new frontier for that strategy, one that would put Apollo’s capital directly behind sovereign-linked financing needs rather than only corporate and consumer credit, at a time when government debt levels across much of the developed world continue climbing.
