Saluda Grade brushes off macro concerns to bet on home equity resilience

Alternative investment firm Saluda Grade doesn’t see the interest rate environment or the current signals of consumer financial stress taking the shine off “There’s a tremendous amount of equity accumulated in the system today, in particular on the residential side. It’s almost $35 trillion of home equity in single-family residential housing in the U.S.. That’s a giant asset class. We want to finance that equity, the homeowner who has that equity,” Eger said.

On top of that, there’s a Saluda forecasts a market of $150 billion in second-lien production in 2026. Eger said there’s no shortage of assets out there; it’s a question of finding the right home for them.

Regarding parallels between some of these assets and those created prior to the financial crisis of the late 2000s, Eger said Saluda’s weighted average Private credit

Eger knows about subprime. She began her career at Bear Stearns structuring subprime mortgage-backed securities (MBS) prior to the crisis, then moved to JP Morgan, Bank of America/Merrill Lynch (trading non-agency RMBS), Structured Portfolio Management, Saluda prioritizes asset-backed finance (ABF) — in which “The key theme that we’re continuing to hear from allocators over and over again is we have maybe been too focused on one form of private credit,” Eger said. “With today’s new definition of private credit that now includes ABF, we’re looking to diversify our exposure, and prudently it makes sense.”

Regarding recent stress in the broader private credit market, Eger said the company is making sure it has ”strong third-party vendors” that look at credit compliance and valuation on certain products.

“There’s always risks, and if nothing else, putting more eyes on this and having it come to the forefront makes everybody in the space a more prudent investor,” she said.