The Credit Edge by Bloomberg Intelligence

The best credit investments are in asset-backed securities, particularly those linked to US households, according to JPMorgan Asset Management. “We absolutely see opportunities for yield pickup there,” says Kay Herr, the firm’s chief investment officer for US fixed income, in the latest Credit Edge podcast from Bloomberg Intelligence. “The consumer’s going to be OK,” she tells Bloomberg News’ James Crombie and Bloomberg Intelligenc...

US companies with about $200 billion in debt — 10% of the junk market — can’t survive at prevailing elevated interest rates, according to Bank of America. “At the bottom decile, we are looking at issuers that are in most likelihood not going to be able to come out of this high-rate episode without doing something to their balance sheet,” says Oleg Melentyev, head of US high-yield strategy at Bank of America, in the latest Credit Ed...

Invesco is buying real estate investment trust debt and preferred bonds from banks, betting that the US economy stays strong and interest rates eventually fall. “If you’re looking at yield, it is kind of a golden age for bonds,” says Matt Brill, the $1.6 trillion money manager’s head of North America investment-grade credit, in the latest Credit Edge podcast from Bloomberg Intelligence. “You’re getting paid to wait and at some poin...

Household debt is a good investment as the US economy remains strong, Jeremy Forster, portfolio manager at Wellington Management, says in the latest Credit Edge podcast from Bloomberg Intelligence. “We do still think that the US consumer is in really good shape,” he tells Bloomberg News’ James Crombie and Bloomberg Intelligence Senior Credit Analyst Arnold Kakuda. Forster expects “compelling” returns in fixed income for 2024, which...

Rising private credit stress will inflict losses on investors and spur volatility, Jerry Cudzil, portfolio manager at TCW Group, says in the latest Credit Edge podcast from Bloomberg Intelligence. “Default rates are going to pick up in a really material way in private credit,” he tells Bloomberg News’ James Crombie and Bloomberg Intelligence Senior Credit Analyst David Havens. “We are currently seeing some real stress,” says Cudzil...

Western Asset Management Co. sees “compelling” opportunities in commercial real estate debt, Co-Chief Investment Officer Michael Buchanan says in the latest Credit Edge podcast from Bloomberg Intelligence. This includes loans for warehouses, distribution centers and hotels, he tells Bloomberg News’ James Crombie and Bloomberg Intelligence Senior Credit Analyst Stephen Flynn, adding that the firm is cautious on offices. In addition,...

Altice ‘Jenga Tower’ Menaces Global Credit Markets (Podcast)Altice distress is ripping through global credit markets and setting some ugly precedents for debt investors. Aidan Cheslin from Bloomberg Intelligence joins Irene Garcia Perez, Eleanor Duncan and James Crombie with Bloomberg News to discuss the ongoing drama. Billionaire owner Patrick Drahi has taken a combative approach to creditors, who are joining forces in an effort t...

Corporate debt markets are poised to perform well provided monetary policy doesn’t get tighter, according to Morgan Stanley. “As a credit investor, the thing that matters most is that the next Fed policy action is not a hike,” Vishy Tirupattur, the bank’s chief fixed income strategist, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Spencer Cutter. “The bar for a hike is very high,” he adds. Morgan Stanley still ex...

The threat of weak companies not being able to pay their debts is rising as interest rates stay elevated. “On high yield and loans, I do think that risks are growing that you could see a reset in spreads,” Meghan Robson, head of US credit strategy at BNP Paribas, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Mike Holland. “The obvious trigger for us would be that debate of rate hikes coming back,” Robson says in ...

Europe’s largest asset manager, Amundi, expects Additional Tier 1 bank bonds to extend gains in what it sees as a broadly positive market for corporate debt. “We’re obviously in this kind of Goldilocks scenario, I think, where the central bank put remains on the table,” Steven Fawn, head of global credit at Amundi Asset Management, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Stephane Kovatchev. “Sub-debt is one...

Altice’s debt woes pose a threat to the collateralized loan obligation market, says Gunther Stein, chief investment officer for US performing credit and CLOs at Sound Point Capital Management. “Altice is clearly an issue for Europe, and in particular the European CLO market,” Stein tells Bloomberg News’ Carmen Arroyo and James Crombie and Bloomberg Intelligence’s Robert Schiffman in the latest Credit Edge podcast. “It’s something w...

Credit investors aren’t getting enough compensation for corporate credit risk, says Matthew Eagan, a portfolio manager and head of the full discretion team at Loomis Sayles & Co. “Judging from the spread levels, I think they’ve gone a bit too far,” Eagan tells Bloomberg News’ Lisa Lee and James Crombie and Bloomberg Intelligence’s Stephen Flynn in the latest Credit Edge podcast. He sees investment grade debt as an opportunity, ...

Asset-based lending is set to expand over the next 10 years at the same heady pace as private credit, according to Bruce Richards, CEO and Chairman of Marathon Asset Management. “The $100 billion middle-market lending and private-credit lending business in 2008 which grew to $1.7 trillion where it is today — a 17-fold increase — you’ll see the same thing happening in ABL in this next decade,” he tells Bloomberg News’ Lisa Lee and J...

Credit derivatives and securitizations offer high yields and can perform well even if the US economy tips into recession, says Jonathan Dorfman, managing principal and chief investment officer at Napier Park Global Capital. “In credit, for the first time in 15 years, you can actually create portfolios that give equity-like returns,” he tells Bloomberg News’ Lisa Lee and James Crombie and Bloomberg Intelligence’s Tolu Alamutu, in th...

Financial institutions are selling off consumer loans under pressure from regulators, setting up investors for significant gains, according to Mark Jenkins, head of global credit at Carlyle Group Inc. “Banks in the US in particular are managing down their risk-weighed assets, and that is creating a deluge of opportunities for us,” he tells Bloomberg News’ Lisa Lee and James Crombie, and Bloomberg Intelligence’s Robert Schiffman, in...

Buyers of distressed real estate debt stand to make significant gains over the next few years, according to Joshua Pack, co-CEO at Fortress Investment Group. “This is going to be a trillion-dollar opportunity,” he said. Pack discusses how Fortress is getting ready for “a massive restructuring” in the sector with Bloomberg News’ Lisa Lee and James Crombie and Bloomberg Intelligence’s Tolu Alamutu in the latest Credit Edge podcast. T...

US-style creditor-on-creditor violence spreading to Europe is a worry for loan investors, according to Camille McLeod-Salmon, portfolio manager at Fidelity International. “What we are focused on is this move that’s in the US towards creditor-on-creditor violence — and the shift that you’ve had there — and that translating into Europe,” she said. London-based McLeod-Salmon talks to Bloomberg News’ Lisa Lee and James Crombie and Bloo...

Geopolitics are a potential menace to public debt markets that could present opportunities for private lenders, according to Mike Dennis, co-head of European credit at Ares Management. “The capital markets in general are still pretty fragile,” Dennis tells Bloomberg News’ Lisa Lee and James Crombie in the latest Credit Edge podcast. “It wouldn’t take much for that liquidity to reverse out of the system,” he said. Volatility may ope...

Collateralized loan obligations are among the best debt investment opportunities for this year, according to John Wright, global head of credit at Bain Capital. Spreads on the structured investment vehicles, which repackage leveraged loans into bonds of varying risk, may tighten further, even as default rates rise, Wright tells Bloomberg News’ Lisa Lee and James Crombie and Bloomberg Intelligence’s Mike Holland in the latest Credit...