“You are going to hit a little bit of a wall because of power. You’re going to hit a little bit of a wall, because of the sheer capital that’s supposed to be there to finance that piece,” says Joel Holsinger, co-head of alternative credit at Ares Management, on the latest edition of Credit Exchange with Lisa Lee.Holsinger expects to see a slowdown, because the current level is “probably unsustainable” for the sheer amount of capital that is required for all these projects, along with the amount of power generation that needs to be built.Already, banks are trying to reduce their exposure across some of their data centre names, Holsinger says – not due to risk or fear, but because they want to buy more.“They’re already at capacity issues, because the opportunity set is so big,” he says.Holzinger adds that there are emergent signs of concern for troubled credits.“Right now, we’re in the situation where the tide has not gone out. That’s very clear,” he surmises, referencing Warren Buffett’s famous line. “Underlying fundamentals are generally good. But you’re seeing some random nudity on the beach.”This said, Holsinger contends there are not yet huge cracks emerging in underlying credit markets, either on fundamentals or spreads. But he believes we are at the end of the cycle, and there is more news to come.Holsinger, who is co-head of the Ares Charitable Foundation, also discusses philanthropy and “Promote Giving”, an innovative method to commit at least 5% of fund performance fees to charity.

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