--- title: "Steven Tananbaum, CIO of GoldenTree Asset Management, discusses AI opportunities in credit markets on Goldman Sachs Exchanges; Could alter growth expectations." sdDatePublished: "2026-08-08T11:19:00Z" source: "https://www.goldmansachs.com/pdfs/insights/goldman-sachs-exchanges/goldentrees-steven-tananbaum--the-evolution-of-credit-investing-and-ai-opportunities/transcript.pdf" topics: - name: "financial service" identifier: "medtop:20001370" locations: - "Argentina" - "Canada" --- Steven Tananbaum, CIO of GoldenTree Asset Management, discusses AI opportunities in credit markets on Goldman Sachs Exchanges; Could alter growth expectations. 1 Goldman Sachs Exchanges: Great Investors Steven Tananbaum: The Evolution of Credit Investing and AI Opportunities Steven Tananbaum, CIO, GoldenTree Asset Management John Waldron, President and Chief Operating Officer, Goldman Sachs Date of recording: July 23rd, 2026 Steven Tananbaum: So, when I think of AI and the credit markets, I think of it two ways. First is economically, because it’s such a driver of our economy. It's hard to see how it's going to actually accelerate from here. So, the issue if it deaccelerates, what's going to be the impact? That's probably, to me, the biggest issue. And if it deaccelerates, will people be taking down their economic growth assumptions? And then there is the trying to line up where the best opportunities are between the different markets. And it could be the investment-grade market could be the better risk-adjusted opportunity. 2 John Waldron: Welcome to Goldman Sachs Exchanges: Great Investors. I'm John Waldron. I'm about to sit down with Steve Tananbaum. Steve is the founder and CIO of GoldenTree Asset Management, a credit manager with over $70 billion in assets under management. He also happens to be one of the sharpest and most successful debt investors in the world. Today, I'll find out what's behind his success and where he sees opportunities ahead. Steve, welcome to Great Investors at Goldman Sachs. Steven Tananbaum: John, it's great to be here. John Waldron: So, your first job was at Kidder Peabody, I believe? Steven Tananbaum: Yes. John Waldron: And then MacKay Shields. Steven Tananbaum: Yes. John Waldron: Which is where you and I met. 3 Steven Tananbaum: Yes. John Waldron: How would you describe your early career and lessons learned in those first couple jobs? Steven Tananbaum: So, when I think of Kidder Peabody two-year investment banking training program focusing on M&A and high yield, and I went from an environment being a student where I had 25 to 30 hours of work each week to having 100 hours of work. So, very overwhelming. I'm sure that you could relate from your experience at Bear. John Waldron: I could. Steven Tananbaum: And I was overwhelmed. So, I had to have this strategy of, okay, what all do I want to accomplish? How am I going to curate my day? And really be very deliberate about that. So, that was probably the biggest memory of Kidder was how do I approach a day? What do I want to accomplish? And be very deliberate, results oriented. In MacKay, I get there and within two years they give me the portfolio to run. So, it's about a half a billion dollars. 4 It's ranked 89th out of 91. Which I didn't realize for anybody who's about to take over a portfolio, that is the best position you could be in. John Waldron: That was a gift. Steven Tananbaum: Yes. There's only one place to go. And I was proud. Within three years we took it to number one. But my approach was, okay, how are we going to do better? And I had a couple of moves. The first move was if I think earnings are going to be better than what the market does, I bet the bonds are going to go up. So, we had that earnings momentum. And the other was, for some of these distressed names or stressed names, which there were a lot in the early 1990s. This was around the S&L crisis. That if there was intrinsic value, if companies were trading below intrinsic value, then there would be interesting creates. So, for something like an RJR Nabisco, that would be the earnings momentum. And that they could grow into their balance sheet. And it seemed like with Philip Morris at nine to 10 times EBITDA, and you can create RJR Nabisco closer to four 5 times and bond yields in the mid to high teens, that there was something to do there where they could equitize part of the balance sheet and that would be good. Or Six Flags, where you could create the debt at 50 cents on the dollar at three times. Another thing, kind of an early lesson-- so, that was a strategy. But an early lesson was trying to think of how do other portfolio managers think. And that was something that I began to, being in a mutual fund where there are inflows and outflows, began to think how do they behave and why? John Waldron: Kind of a game theory approach or--? Steven Tananbaum: It wasn't so much a game theory as watching them behave. So, in other words, a game theory is what's the logical way, opposed to, no, what do they do and why do they do it? So, for instance, when I got outflows, I'd try and sell the hardest stuff first because I noticed I couldn't sell it in a week or two. Whereas they would sell the most liquid stuff first. And so, moves like that. 6 One of the moves that I ended up doing later was after the financial crisis, I couldn't sell any loans at 82 cents because you got dinged. It was very prohibitive to buy a loan at 82 cents. But if I sold it at 86 cents, you got much higher credit in the CLOs. So, I began to lift my offerings to 86 cents because I knew that they were looking for loans at 86 cents. John Waldron: There was liquidity there. Steven Tananbaum: Yeah. John Waldron: Right. So, you're a credit investor really at the end of the day, although you do all kinds of things. How would you describe your natural state of being as an investor? Steven Tananbaum: So, I never pigeonholed myself as a credit investor. I always thought of myself as an investor. I traded stocks and options, got my Series Seven in 1963 in college. When I was at MacKay Shields, when I took over the portfolio, I asked to be managed in the equity division. And in fact, I ran a convertible equity portfolio which did 7 nicely. I was proud of those returns. So, I always thought of myself as an investor. And in fact, whenever we look at an opportunity, any deal, I want to understand the capital structure and what I think is the best part of it, even if we can't invest. Like on an LBO, well, would I buy the equity here? What do I think is the best part of the stack and why? John Waldron: So, MacKay Shields. Long career. Successful. You lifted the performance. Then you decided to go out on your own. What drove that decision? Steven Tananbaum: I saw this huge entrepreneurial opportunity. So, I'm going to finals. And there are only four or five long-only firms that I'm seeing in every final. In every large final, there are just a few of us that are up for contention. And many of them were being awarded two and three mandates. So, in other words, there's five in and three are going to win. Not bad odds. So, coming from a multi-strategy firm, MacKay Shields, I saw in, like, growth equity, there were 100 managers who were top quartile who had decent records, which we were 8 one of them at MacKay Shields in high yield or below investment grade credit, much shorter list. So, that would be on the long-only side. The other side was the hedge fund side. That here's something where I thought it would be much tougher because the fees were higher and your mandate was broader. But actually, I saw it was almost upside down. That there was such a imbalance between people who could actually invest in credit and the people wanting to give them money that I saw this huge need. In fact, our original hedge fund investor who I brought in told me if I went off on my own, he would double the size of the money, over $100 million, and double the fees. So, I saw this type of behavior. And in both long only and in hedge funds, we had done really well. And the hedge fund had returns for the first three plus years, three and a half years in the twenties. So, it felt like we were entering a good space. John Waldron: So, you launched your firm in 2000. Let's talk about the environment. What did you see as you were launching your firm from an environment standpoint? 9 Steven Tananbaum: So, this was the period where the dotcom era, there was a lot of uncertainty. It was just starting to roll over. 1999 was a very strong year. And in 2000, began a little bit of the hangover. And you saw that particularly in the summer. That's where things began to get a little dicey. And whenever you have this new technology, this innovation, there is the "who's being impacted?" And the instinct, and you're seeing this in AI now, is to be very broad. And that's what happened. There were so many different parts of TMT that were concerned about what the impact would be. And for instance, you take advertising. In advertising, newspapers clearly were impacted. But it took around four or five years to really get going, till only 2005 or 2006. But you take something like TV programming or cable programmers more specifically, that was a terrific industry for another 15 years. But they were also impacted. So, there were a lot of opportunities selling off, particularly in that summer. And then there were names like TMT, like Telesystems International. This was a hodgepodge of cellular company investments, international cellular 10 stakes, that ended up trading at 30 cents on the dollar because there was concern whether you could get financing. We cut a deal at 70 cents on the dollar. They ended up selling for significantly more than the debt the following year. So, there was definitely things to do. John Waldron: So, early days your returns are pretty good, I suspect, because you were taking advantage of that dislocation, dispersion, however you wanted to frame it. Did you have any tougher moments? I mean, I assume, you know, you start your own firm, it's a little different than in the warm confines of one of these large organizations. Steven Tananbaum: Yes. John Waldron: So, talk about any challenges you faced. Steven Tananbaum: So, at MacKay Shields, the returns were mostly very strong or average. And more very strong than average. The first seven years at GoldenTree, pretty much the same, either very strong or average. 11 2008, really poor year. It was very humbling. It was really the first time we had just a bad year. And so, that would be that moment where we had to make some corrections. And we knew we could do better. We knew our risk management wasn't where it needed to be. I also had this view that we weren't the only ones. And if we made course corrections, if we could get through to 2010, we would be differentiated. So, that was my mindset. So, in 2009, we passed our high-water mark in October. Very proud that we were able to do it in a finite period of time. And I remember thinking at the time, if I were to look back at my career, I probably was a seller too early. And I saw that the underwriting I felt in 2008 and 2009 was materially better than what it had been in prior years because of this concern. And that you were likely to be tighter than what people expect. So, it was going to really swing as it usually does. And I felt even more so going from very wide to very tight. So, we still were risk on after October of 2009. So, 2010 we ended up having a great year. 24%. And 2009 and 2010 were two of the best years of my career. And that wouldn't 12 have been possible without the very humbling and disappointing experience of 2008. John Waldron: Yeah, it's a good lesson. Talk about your research process. I've always found you guys to be very granular, very focused on details. But there must be something about the process. And maybe it's part of what you just said in terms of changes you made in risk management. Just talk about how you construct that process. Steven Tananbaum: You know, it's interesting because I think you might find it surprising that there are aspects that are granular but very targete