November 6, 2025 • 45 mins
Credit investors should be careful about participating in the artificial intelligence boom, according to DoubleLine Capital. “You have to be not only cautious about the tech sector, but the tangential related sectors that are providing support for these new projects,” Robert Cohen, the firm’s director of global developed credit, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Robert Schiffman in the latest Credit Edge podcast. “Who knows what the spillover will be if the music stops?” Cohen added. They also discuss compressed returns in private debt markets, commercial mortgage-backed securities, how to invest in corporate bonds by duration, rating and sector — plus the outlook for 2026.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:17):
Hello, and welcome to the Credit Edge Wiki Munkets podcast.
My name is James Crumby. I'm a senior editor at Bloomberg, and.
Speaker 2 (00:23):
I'm Rob Schiffman, a senior analyst covering tech at Bloomberg
Intelligence and co head of our US High Grade and
High Yield research teams. This week, we're a very pleased
to welcome Robert Kahn, the director of Global Developed Credit
at Double Line, the employee owned money management firm. Ay
doing today, Robert doing well?
Speaker 3 (00:39):
Thank you, happy to be here?
Speaker 2 (00:40):
Awesome? Oh great. For those of you who don't know Robert,
he joined Double Line in twenty twelve and is a
portfolio manager and the director of the GDC greup. He's
also a permanent member of the Fixed Income Asset Allocation Committee.
The firm manages around one hundred million dollars in client
assets and is among the most followed thought leaders on
the street. With a pre eminent fixing come franchise. We
(01:01):
are pumped to hear your views on credit markets and
to get some first hand insight into what the smart
money is doing. So, James, why don't you kick us off?
Speaker 1 (01:09):
Yeah? So, credit markets have brushed off a recent bout
of distress and are seeing a barrage of debt issuance,
mostly from tech companies looking to fund a gigantic buildout
of AI and associated infrastructure. Big tech has a lot
of cash on hand, but there's still concerned about how
this massive increase in spending will hit earnings. Meta the
Facebook and Instagram provider, so it's stocked. Priced tank by
(01:30):
more than ten percent last week, chopping off about two
hundred billion dollars in market cap, But that didn't stop
investors placing one hundred and twenty five billion dollars in
orders for a thirty billion fundraise on the same day,
setting the record for the biggest order book ever for
a corporate bond deal. Investors just can't get enough tech
bonds at the moment, it seems, and there's a lot
more to come in both public and private markets. But
(01:53):
anytime we see such massive demand for bonds or debt,
alarm bells do ring the FOMO The buy now are
questions later? Robert, is this a positive market signal? Are
you joining the gold rush into AI? Or should we
be a bit more cautious here?
Speaker 3 (02:07):
I think we're supposed to be cautious, so you to
zoom out a little bit when a sector of the
credit markets is small or nonexistent, and then this becomes
more frequent and then becomes large, which it's not yet,
but when it gets momentum, you're supposed to be cautious.
These transactions, particularly and particularly investment grade are sort of
(02:27):
novel in terms of the way they're structured, the features
in terms of being off balance sheet, and I think
you're supposed to be careful. Of course, we don't know yet.
It's unknowable at the moment whether these capital projects will
actually be profitable, and we also don't know how many
are ultimately will be built. You can think of it
as if you think of it more simply, it's really
(02:49):
they're building capacity. And when you build capacity and fixed assets,
sometimes you build too much or not enough. Because these
projects take time, they take years to put together. By
the time they come online, there might be I don't know,
there could be one hundred more projects coming online that
could be sufficient or insufficient. It's really unknown, So I
(03:09):
think you have to have a level of skepticism. Speaking
about the investment grade companies, they clearly have rock solid
balance sheets and so they can handle whatever comes of
these projects. If they build too much. Certainly, I don't
think it will be a material impairment for these for
the MAG seven so called MAG seven, these very large companies,
(03:33):
but for the projects themselves it could be a problem.
And of course there's a spill out over into other
areas of the economy. So these data centers use power,
they consume materials, they use chemicals. Who knows what the
spillover will be if the music stops. So I think
you have to be not only cautious about the tech sector,
(03:54):
but the tangential related sectors that are providing support for
these new projects.
Speaker 2 (04:01):
Yeah, I think there's a ton We're going to dig
into details more into this AI tech trade, but I'd
love to just get a little bit of a sense
from you and that this is such an industry driven
by short term results, and we're obviously seeing markets still rally.
How do you maintain a long term investment horizon in
(04:21):
your decision making when so many people are focused on
how you're outperforming today and tomorrow.
Speaker 3 (04:29):
Well, you can't focus on short term results. It's a
simple proposition that's hard to stick to. When markets get
rich in valuation, you're supposed to be cautious That could
lead to underperformance for a short period of time or
maybe not. It depends on the situation. But sticking to
investment discipline is the only tool in the toolkit. Really,
(04:52):
when the opportunities are light, then you have to be
stepping back. I think it's important to communicate to you
investors and tell them what you're doing, and when will
you outperform and when will you underperform? I think in
this current environment, double line telling investors that we see
the things that everyone else sees, we're thinking about them,
(05:12):
and we're cautious. I think that that helps our cause. Luckily,
our performance is good now. But as valuations get higher
and higher, is credit spreads get tighter and tighter, you know,
performance will be harder and harder to come by. If
we want to have a level of risk management, that's important.
So I guess I leave it there.
Speaker 2 (05:32):
Well just well, just let's set a baseline then, because
I've heard you say cautious now twice. So where do
you think fair value is right now for IG and
high yield? And what are those one or two things
that you're cautious about that you think that the market
is missing.
Speaker 3 (05:50):
Well, I think when you talk at a spread level,
you're kind of missing what's happening underneath the hood. So
I think it's more interesting to talk about the fact
that there's, at least in low investment grade a significant
amount of dispersion. And so I think it's all about
credit selection really more than anything else. Fair value at
the index level, I don't really think about it that way.
(06:11):
I think about fair value building up from our portfolio
name by name, and does it does do the credits
we own make sense? So when I talk about high dispersion,
what that means is if you take high yield, the
single BE index spread is about two eighty or so,
it's about where the index is. The index High held
(06:31):
index spread is about two eighty six. The spread on
the single B index is about the same. But there's
a lot of dispersion, meaning that there are many credits
that are much tighter than to eighty, and there are
many credits are much wider than to eighty. There are
some credits that are in the low two hundreds, there's
some credits that are a thousand over And according to
(06:52):
some research, I see the dispersion that that difference between
UH the names that are higher than the index spread
and and lower than the index spread is now the
eightieth six percentile, so it's only fourteen percent of the time.
Is the variation between spreads higher the loan index is similar,
I don't. I think it's in the seventies. So the
(07:13):
difference between the tightest spread and the lower and the
widest spread is still usually lower than it is now,
so only twenty five percent of the time this difference
is higher. So fair value I think you have to
look on on a credit by credit basis. If I'm
looking at a chemical company with deteriorating financials and an
(07:34):
uncertain outlook and it has a tight spread to the
hyield index, that seems pretty rich. If I'm looking at
a very stable, let's say, insurance business that's been growing
and has stable learnings and cash flows and is kind
of you know, on index or maybe a little tight
(07:54):
to the index, that seems that seems reasonable to me.
So what the market is doing is they're paying for quality.
So the tight spread credits are inside the index, and
the credits that have uncertainty are wide to the wide
of the index. Where they're talking about high yield bank
loans or investment grade for that matter. In the investment
(08:16):
grade space, for example, BDCs have widened out because there's
great concerns about BDC's the stocks have been sort of
repriced over the last few months. Worries about quite simply
rates falling interest rates don't help BDCs because they're floating rate.
But then credit concerns with the headlines of first brands
and so on, and so if you put that all together,
(08:37):
it's hard at the index level to say eighty base
points on the investment grade index as a whole, is
that the right price, or is two eighty six on
the on the high old index seem fair? I'd see
they both seem very tight and leave little room for mistake.
Is I guess the way I would characterize it, I
could say, you know what, maybe something that would be
(08:58):
quite fair quote fair ves value in a stable, growing
economy would be a little wider exactly how wide? I think,
even more from the bottom up, as I mentioned before.
Speaker 1 (09:11):
And when you go back to Tech and look at
that Robert, you know the deal we talked about Meta.
You know, they came out with initial price talk on
that new deal quite a bit wider than where they priced,
just because of the massive demand for those bonds despite
the fact that you know the stock price was tanking
on the same day. You know, what do you do
in that situation? Do you just not participate? I mean
(09:31):
you've kind of forced to, right.
Speaker 3 (09:33):
Well, we're not forced to. I think if you are
an active manager, which we are, we're not forced to
buy anything. So if there's a position that we don't like,
a credit we don't like, then we don't need to
own it. If there's something we like a lot, then
we do own it. I also point on you know,
most of the money we manage is multisector, and so
the pitch for that is if the corporate credit market
(09:56):
gets a little too nutty, then we can allocate to
other areas of the fixed income So we can stick
true to that discipline because we have the flexibility to
say no and move money around if necessary. So I
think active management is very important now. I think another
theme that maybe people don't talk about as much is
since the financial crisis, active management hasn't been as important
(10:19):
when rates are taken to zero because it's all sort
of liquidity trade where the worst credits actually perform the
best and the most unprofitable companies and the equity markets
outperform an environment where we're no longer in QE and
we have higher base rates. Credits need to live on
their own performance, and I think credit selection has been
(10:42):
very important twenty twenty five and will continue into twenty
twenty six. So I don't think you have to own anything.
I think you have to be careful, very careful of
credit selection, and I think credit selection will be rewarded.
It was rewarded this year with years not over yet,
but I think it will continue to be rewarded next year.
Speaker 2 (11:00):
There's a lot of layers to this credit selection, even
inside of credits. So for something like Meta one is
you know they should bonds as far out as with
fifty year maturities. Interesting to get your thoughts on how
people should evaluate tech names fifty years out and how
you value that. But more specifically, companies like this are
now issuing somewhat liquid private deals, and I'm wondering how
(11:25):
you're discerning between am I supposed to be owning a
more liquid public deal or something that's giving me a
little bit more yield through an SPV that might not
be as liquid. How are you determining fair value of
public versus privates within the same name.
Speaker 3 (11:43):
Well, to answer your second question, first, it depends on
where you're putting it. So people often pay for liquidity
when they don't need it, and so in a strategy
that does not need as much liquidity, maybe it's some
sort of SMA or private fund that we're managing where
we liquidity is not a primary concern, then we should
(12:04):
get paid for that ill liquidity, and we're happy to
do that, all else being equal, credit you know, credit
neutral rates neutral. If it's just less liquid and we're
putting in a place where it's appropriate, then that's totally fine.
We have other funds at our firm that have daily
liquidity demands, and so if we are accepting illiquidity, we
(12:25):
have to determine whether that's the right place. So that's
just a simple question of are you putting in the
right place? And then the question is does that SPV
have substantially more credit risk because of the nature of
the structure than the parent company. Of course it does,
and then you have to evaluate that credit risk. I
think that these are generally structured I'm speaking more broadly
(12:48):
now in a way that the credit risk is pretty
well buttoned up. So you're taking ill equity risk. I
think you're taking some extension risk depending on how these
projects unfold, and so those are acceptable and putting them
in the right place is fine in terms of thirty year.
You know, we're not super excited here at the firm
about long duration assets anyways, because we're worried about steepening curve,
(13:12):
and then of course when you layer credit risk on
top of that, it's not our favorite trade. So that's
not something that we're super excited about, like long duration
interest rate exposure to begin with, and then add long
duration tech exposure on top of that. That wouldn't be
our cup of tea, as people say, so not for us.
(13:33):
But you know, keeping it on the shorter end private
versus public, taking additional illiquidity risk, I think that's totally
fine as long as you're putting in the right place.
Speaker 2 (13:45):
And what was your view on the Bigniet deal? Did
you think that was fairly valued? You know that it's
one of these transactions that broke ten points higher than
we're we're priced. You know, how does that suit you?
Speaker 3 (14:03):
I wasn't super excited about it, to be honest. I
think it's neither fish nor foul. It's not really a
standard investment grade deal, and I think there's a lot
to look at in the high old space where you
can replicate a similar type of yield profile. So I
thought it was fine. I didn't think it was something
you had to buy. I'd say that. I think if
(14:24):
you bought, if you got it at new issue at
where it was originally priced, that that was interesting. But
then where it's trading in a market, I don't think
it represents anything really unique. Again, because you have to
get paid for the liquidity, for the extension risk. You
price all that in. You know the uniqueness of the
structure that's worth something, and so is it cheap. I
(14:46):
didn't think it was particularly cheap, but maybe it's fair value.
But it wasn't some kind of unique opportunity.
Speaker 2 (14:54):
And you've got better insight than most into what the
supply looks like over the next few months. So I
think the market was a little bit surprised by the
size of metas deals. Now we're sort of hearing whispers
of thirty eight billion coming out of Oracle. Alphabet does
(15:15):
more in dollars in euros than I think people would
have anticipated based upon what they're cashflow looks like, what
does the calendar look like to you? What are you
seeing in terms of people lining up private deals, people
lining up public deals. Are we going to see now
a standard sort of twenty five billion dollars at the
new size of the jumbo deal for the next six
(15:37):
to twelve twenty four months or these aberrations.
Speaker 3 (15:41):
Well, it's hard to predict exactly the size and timing,
but i'd stay from a higher level. We have been
below a trend in terms of issuance and M and
A transactions. These aren't M and A transactions, but in
terms of just overall corporate issuance has been down since
the pandemic. So corporate debt as a percentage of GDP
since twenty twenty has been going down. That's unusual when
(16:06):
you're not in a recession. So I would expect corporate
istionins to go up. Putting aside a for a second,
just because M and A normalizes and you get a
more normal M and A calendar, you get above trend
M and A, and then of course you have these projects,
these AI data center infrastructure build out projects. I think
we have substantial growth insuans. The exact size is a
(16:28):
little bit hard to pin down, partly because of timing.
There's a calendar effect. As we get to the end
of the year, you know, we probably have a couple weeks.
People don't want a price during Thanksgiving, they don't want
a price during Christmas. So what does the rest of
the year hold. I don't know, but let's say over
the next six months, I would expect a very strong calendar.
There is very strong demand. We know that the credit
(16:49):
markets overall are undersupplied, and so investors are happy to
receive more paper. You can see how these deals are subscribed,
how they trade on the break. Those are the indications
that the market is happy to see those, and then
in below investment grate inside we haven't seen any LBOs really.
We've seen the one electronic arts deal. We've seen that
(17:12):
BASF is selling their coding is business to Carlisle. We're
going to start to see things more of those types
of transactions as well. So I think it's going to
be busy both from the investment grade and blow investment
grade side into twenty twenty six. I think that will
be the story for twenty twenty six new issue.
Speaker 1 (17:30):
How much is double Line Patta spacing in this AI
new issue story right now, I mean you buying meso,
you're buying everything as it comes out.
Speaker 3 (17:37):
We're justly yeah, we're definitely not buying everything as it
comes out. Salesmen like to hear that you're buying everything
as it comes out. I mean, I would be everyone
every salesman's best friend if I said, yeah, we buy everything,
but no, absolutely not.
Speaker 2 (17:50):
I don't know.
Speaker 3 (17:50):
We had to account on the number of times I
use cautious, but I'm When you have an emerging sector
of the credit market, I think that you have to
be maybe use a different word, careful and and ad
mitigate how much exposure you have to these areas. There's
a technical perspective where people pile in and then all
(18:12):
of a sudden they you know, maybe don't they decide
they don't want as much as they as they bought
in the first place. These credits need to season, These
structures need a season because they're somewhat novel. So we're
certainly not buying every deal. We're actually buying a well
I should say holding. Sometimes we buy and then we trade.
But overall exposure i'd say is modest.
Speaker 1 (18:34):
And in terms of expressing that caution, are you buying CDs?
I mean the oracle CDs popped up, and I think
METS is going to come out with CDs because it's
the man for it. But are you hedging yourself through
the swoops?
Speaker 3 (18:46):
We can do that, but we would do that more
as a strategic position as opposed to a risk management perspective.
If we own too much of something, we're in a
position where we can just sell that exposure in the
cash market, So we can use CDs really more firstategic
purposes if we think that there's a way to buy
something cheap that way, But we really use CDs as
(19:07):
a risk management tool, I'd say quite lightly. That's just
the way our firm operates. We tend to be managing
on a cash basis. We like to buy and hold
exposure that we can manage and move in and out of,
So we don't like to own so much of something
that we're stuck in it and have to use synthetic
tools to mitigate risk. That's just our style, So that's
(19:31):
how we operate.
Speaker 2 (19:34):
The market has shifted somewhat from banking syndicates to buy
side syndicates. Are you guys approaching companies on private deals
as anchor tenants or syndicated transactions for names or projects
that you like, And is that a real opportunity where
(19:55):
again you can get in at much better levels than
where something ultimate trades when there's liquidity.
Speaker 3 (20:03):
I'd say broadly no, there are specific situations where we
know a credit well, I'd say, I have to zoom
back and say, our philosophy here is that there are
credits that we have covered here for a very long time.
We know the companies, we know the management team, we
know how they operate in good times and bad, and
we're happy to provide them capital either in a direct
(20:24):
way or indirect way as the opportunities come. But you know,
we're not what you would consider a private credit firm overall,
so we don't have a bunch of bankers knocking on
doors to you know, help finance their businesses. We're more
passive in our orientation where we generally speaking, are looking
(20:44):
with the market gives us and we decide what to
buy or sell based on what's out there in the market,
and it's to select few opportunities where we think that
there's a specific situation where we have a relationship. What
we lean into let's say that's the minority as post
of the majority of what we do. And we've definitely
been vocal about our views on private credit, which I
(21:06):
can get into for a minute. I'm in private credit
in twenty twenty was an outstanding opportunity, and we participated
in ways we could to provide capital when the capital
markets were frozen, and those were epic opportunities where you
had double digit yields with amount of security that made
the risk of impairment deminimous. In my estimation, that turned
(21:29):
out to be true the way those seasoned fast forward
to today, I don't think there's any alpha in private credit.
I put out a video in twenty twenty three that
I believe is posted on the double Line website where
I thought that the returns of private credit and public
credit would converge so effectively be no benefit to being
in private credit. There has to be a yield benefit,
otherwise you're not getting compensated for the liquidity, for the
(21:54):
concentration risk, for the credit risk. To me, if I
think about private credit today, it's just a riskier cohortive credits.
It's not bad or worse, it's just a different positioning
they're mostly B three B minus. They tend to be
more concentrated, holding larger positions, often with a software tilt
to it. So that's a different trade. You know, you
(22:17):
could say whether you like it or not, but it's
different than investing in the High Old Index or the
Bank Loane index. Those are broadly diversified, they're higher in
credit quality, and of course they're liquid. You can trade,
you know, depending on the strategy, you can be in
a daily liquity fund where you can get in and
out every day. So it's a completely different trade. And
(22:39):
because those spreads have compressed and the returns have compressed,
I don't think there's a big opportunity there. Frankly so,
and some of the private credit managers have gone publicly
and said that expect lower returns. I believe Blackstone. The
Blackstone CEO John Gray was in the press somewhere saying
expect lower returns. So if you're going to get mid
(23:00):
to high single digit returns in private credit, well that's
what ail index is doing here to date so far.
So where's the advantage That would be my question, And
that goes to your question about chasing companies directly. If
you're trying to finance a company right now, directly you're
competing on fees and terms, and I don't think it's Uh,
we don't want to get into that environment where we're
(23:23):
winning by the tightest spread in the loosest terms. I
don't think that's something we want to be doing. So
we don't think we have a competitive advantage in terms
of anything else, like in terms of providing financing to
someone on an with a set of terms, and so
it's not something we're really super excited about now, although
in twenty twenty we were very excited about it because
(23:44):
if we're one of very few people providing capital, then
we get pricing and we get terms, we have the
structure we want, then that's that's quite exciting. Then we
want to lean into it. Definitely.
Speaker 1 (23:53):
It's a really interesting debate you've hit on. You know,
we've discussed this for some time. I remember this time
last year we were talking with PIMCO the advantage in
public and private. They said at that time, I think
that there was about a one hundred basis points advantage
to going private and you know, sacrificing liquidity. Then we
you know, come May, we were talking to Dimensional, which
(24:13):
had a very academic approach, and they actually found over
a long term that high yield public high yield did
better than private And then switched back to a couple
of weeks ago, and we had Blackstone on this show
talking about a two hundred basis points premium on private
IG over public IG. And then we got into the
whole area bespoke financing and you know, you're tailoring it
(24:36):
to your exact needs all that stuff. So people are
kind of all over the place in terms of where
they think private might shake out. And also I would
add that your colleague Jeff Gundlack at our event in
the summer compared private credit to CDOs, which obviously blew
up the financial world and the rest of the world
in two thousand and eight. So there's so much divergence.
(24:57):
Don't you find, though, that your your end use is
your customers want private because that's what's host at the moment.
Speaker 3 (25:04):
I actually know, I think that there's been such a
boom in private credit that I think our clients are
actually asking questions of the level of skepticism. They know
that they're called constantly from private credit managers with the
newest fund they've committed a lot of capital. I think
in some cases the returns have been good. Sometimes in
some cases the returns have not been so good, and
(25:26):
they're not clamoring for more of it. If anything, they're
interested in alternatives ways to diversify their exposure away from
private credit, and those are the types of solutions we're providing.
You mentioned how people have been quoting how you there's
a yield advantage in private versus public, different managersment mentioning
different yields. I point out that yields are not returns.
(25:50):
So there could be credits that have a higher yield
but ultimately become impaired and the returns are lower or
at least get marked down for some period of time,
so you can uh. I mean in the public market,
you see that bank loans versus HIG yield, bank loans
yield more, and I have I have a total return
that that is lower than the high old market. So
I think it's very important to point out that that
(26:11):
yields are not returns. Uh. But no, uh uh, back
back to what I was saying before. If anything, we're
getting more clients asking questions about private credit, and the
number of questions seem to be increasing in frequency, where
it was more of a trickle. Now it seems like,
I don't know. Several times a week people want to
know what do we think about private credit, what do
we think about the credit markets overall? And how do
(26:33):
we put this all together?
Speaker 2 (26:35):
So again I'm just hearing hints of caution and I'm
I'm trying to squeeze out now, how you convert in
those yields out there to return? So where do you
see the best opportunities, what are the sectors, what's the duration,
what are the ratings? How do we hone in on
how to outsmart? How to outsmart this market?
Speaker 3 (26:57):
Yeah, well, I can tell you what we're doing. Maybe
that's the easiest way to do it. And we have
strategies that have a variety of different risk profiles, so
I can start more general and we can get specific
if you want. But we have been as a firm
trimming credit risk. I feel like maybe for eighteen months.
We do it very gradually. So a credit we liked
(27:18):
that was a nine percent bond gets refired into a
six percent bond. We don't think it should be six percent,
and we just let it go. We're worried about sectors
in the corporate credit market. We've been worried about, you know,
some of the cyclical stuff like chemicals, worrying about the
housing market because housing market. The housing market has been
languishing because of high rates, and so our housing exposure
(27:41):
goes down and then you go and sell on and
sell retail other sectors. So as we raise cash in
these sectors, then we have to do something with it.
We've been moving it in some cases last year when
spreads we're tight, moved it to treasury and agency mortgages,
which worked out fabulously when we have the taper tan
not the tape. And it was a long time ago,
(28:01):
the tariff, the Liberation day. So when Liberation Day happened
and we were sitting with higher exposures to treasuries and
agency mortgages, that look great. And of course there was
a great buying opportunity that lasted for a moment and
then spread snap right back. So now if you look today,
it looks the same as it did at the beginning
of the year. What are we doing now the same
(28:22):
concerns that I just mentioned. Rotating out of some of
the cyclical names, sickle sectors, we like other sectors of
the fixed income market better. We like CMBs. Why because
sectors that get beaten up CMBs got really walloped during
the pandemic. Those tend to have the tightest underwriting standards.
And CMBs assets have been repriced. So if they were
(28:46):
marked at one hundred and now they're marked down to thirty, well,
if the thirty is probably more realistic, particularly if it
actually traded, but traded hands at thirty, you know that
the value is thirty, not one hundred, and so it's
easier to lend when you have that sort of marked
to market and the under ranting standards are are tight.
And so if I can get high corporates are in
high sixes, If I can get high sixes in a
(29:07):
CMBs structure that has more conservative lendings, more conservative structure
in terms of lending standards, and I now know what
the asset is worth, those are interesting. And CMBs, of
course is not just office space. It's industrials and hospitals
and all sorts of things mixed in their residential and
(29:27):
so it's a mix of assets, and you can construct
a portfolio that has the right risk profile. Non agency
residential mortgage back securities. Most housing activity has been an emic.
But what that means is most borrowers have a very
large cushion in terms of equity cushion, and so if
you have a thirty forty percent equity cushion, then the
(29:47):
risk of impairment if something bad happens. The real estate
market is low, and just like CMBs, underwriting standards have
been very tight. So while you could argue that underwriting
standards in corporate credit are loose, in that market, they're tight.
So we've been moving, we've been allocating more money away
from corporate credit over the last year or so. And
(30:08):
so if you look back in time, maybe in twenty
twenty two, twenty three, twenty four, twenty twenty two, we
had spread wide now a lot, and I thought at
the time the corporate credit was quite cheap. I thought
that we should be overweight corporate credit, which we were
at the time, So we had more corporate credit than
some of the other things I just mentioned. R and
(30:29):
BS might have been a very small allocation at the time.
But then as we move forward in time and credit
spreads tightened and we had to reallocate, and so we've
moved from being maybe more corporate focused to now more
focused on some of these securitized sectors. That's how we're
solving the puzzle right now.
Speaker 1 (30:50):
Not all of that has done well though. There have
been some blow ups eating on the triple as in
some of those. I mean, they maybe are idiosyncratic, but
do you have to do more credit work now to
analyze those structures.
Speaker 3 (31:00):
Well. I think the blow ups are the opportunity in
a way, because I said sectors that are under stress,
once they come through that stress tend to be quite
clean for the next few years. In the corporate credit market,
the analogous sector with the energy energy, there is a
wave of shale financing in the high old space and
I don't know was that twenty thirteen, twenty fourteen, something
(31:23):
like that, and then oil went from one hundred to
thirty and there was a wave of defaults. Many of
those companies were wiped out, some still limped along, and
then we had the pandemic where famously oil went negative
in May of twenty twenty, and then we had another
wave of defaults. Now you look at high old energy,
it's very clean. The companies are self funding, they have
(31:43):
low leverage, they generate cash flow, and so what was
the most dangerous part of the credit markets or the
high old corporate markets, I should say energy is now
one of the safest and so we're applying that same
sort of logic with CNBAS. What was quite dangerous in
twenty twenty and has gone through this period of stress,
we think is actually one of the areas that's most
(32:04):
stafe because investors become you know, shell shocked from it
and don't want to touch it. Well, when that's the when,
when that happens, that's actually a great environment to invest in.
So that's why we we think that that's very interesting
right now.
Speaker 1 (32:20):
Right right when you look at the returns of this year,
it's kind of interesting that the investment grade debt has
done better than the junk you know, Triple b's of
wayout performed Triple c's, possibly because of the fear around
cockroaches and all this stuff at the post end of
the market. But it doesn't often happen that in a
very risk on year, like you know, Trump gets re
elected and everyone's risk one again. But but what's happened
(32:41):
to junk bonds? Are you are you really long I
G and then short high yield as a result, and
are you worried at all about potential releveraging because of
M and A. You know, potential slowdown in earnings. You know,
the economy might start to sputter. Is there is there
risk in I gent?
Speaker 3 (33:00):
Well, I think I'd first say that if you look
at the returns where investment grade is outperforming high yield,
a lot of that is duration. So if you look
at access returns, look at it right now, double b's
have actually outperformed on an access return or yield or
return over over treasuries more than triple b's. Double b's
are up on an access basis around two and a
(33:22):
half percent, Triple b's only one twenty eight. So on
an access basis, you'd be better off in high yield.
On a toll return basis, the duration has helped investment
grade credit. I think if you look where where we
are now, we are in a carry environment, that spreads
could tighten a little bit more. I can't say that
you know this is the end. We could certainly go tighter,
(33:44):
but let's just say there's a lot more room to
widen than tighten. It's quite asymmetric. So in a carry year,
and if you're in an environment where credits threads are
very tight, and it's all about carry. Then again, you
want to think about credit risk and up in quality
is certainly a mantra that we have been saying at
double line for a while. We tell our clients what
(34:05):
are we doing? When we tell them what we're doing
with their portfolios, we are moving up in quality. So yes,
that's more investment grade than high yield. In terms of duration,
that's a little different, so we are inside the index.
In terms of duration, the investment grade index is what
six duration of six or so, we've been focusing on
(34:27):
the ten years in in basically keep it to keep
it simple. So we think that the long end has
risk of steepening further, and so we don't want to
be exposed there and we wont want to be up
in quality in terms of credit quality. So I think
that the trend of investment grade being competitive, I don't
(34:48):
know if it's going to outperform, but certainly competitive with
investment with high yield next year, I think that that's
definitely in the cards. I thought that investment grade would
be competitive with I yield this year. I didn't necessar
predict as much of a duration rally as what occurred,
so it turned out to actually outperform, but I thought
it would perform well because of the phenomenon of weaker
(35:10):
credit deterioration and the dispersion that I talked about earlier.
I think that story continues into next year, where the
dispersion is continues, you know dispersion. Usually it results itself
one of two ways. You get a tightening of all
this so that the you know, single B, triple c's
that are wide join the type market. Where you get
(35:31):
it tight where everything is tight, or you get widening. Now,
we already had the type market that was that was
last year where everything was spreads. Spreads were all compressed
within one range depending on rating, and then we've been
slowly decompressing. I think that decompression continues over time. It
usually starts with a sector. So we've been worried about
(35:53):
real estate for a while because of high rates. Then
you add chemicals, then you add retail. People are worried
about the consumer. When you are adding things to the list,
That growing list tends to keep going. You keep adding
things to the list, and then all of a sudden,
spreads widen a little bit and then they wilden a
little bit more. But this could take some times, so
(36:15):
this isn't something that all of a sudden the economy
falls apart on January first. I don't think that. I
think that this could take a couple of years to
play out. I think the liquidity in the market, the
AI spending, the FED lowering rates, deregulation coming, fiscal spending,
all that we've got. I don't know how many how
much stimulus is coming, there's a lot of it, and
so betting against all that stimulative impulse into the economy
(36:39):
is that would be a strong position to take. I'm
not taking that. I think what more likely to happen
is that we continue with the trend we're going where
we have some simmering, simmering stress under the hood, but
the market keeps roaring with these big mega deals, big
mega AI deals, The blow investment grade market ramps up
(37:03):
LBO activity, and I actually think we are likely to
have a leg up and risk the equity markets find
new hides next year. Multiples expand, credit spreads stay very tight,
and instead of a decline in corporate credit as a
percent of GDP, we start to see a resurgence, a
growth in corporate credit as a percentage of GDP, and
(37:26):
we see growth in the overall number of issuers in
the investment grade and hyld market, and that would set
the table for instead of caution, maybe concern. We go
from caution to concern under under that scenario, and I'm
waiting for that. I think that that's probably at least
a year away. It could be two years. The timing
is very difficult to predict. So that's where I think
(37:49):
we're going.
Speaker 2 (37:51):
Well, you started to list out a wall of worry.
I think that's our life is fixed income analysts, as
that's all we do is worry. But what actually has
to get up to that next leg? It sounds like
you're also describing a little bit of a Goldilock scenario
where spider tight but the fundamentals are fine, and from
(38:12):
a fiscal policy standpoint, it's also positive. What has to happen,
Like we've seen a couple of these one off blow ups,
What has to happen for this market to go significantly wider,
for people to lose confidence, for everyone to say wow,
this We knew this was way too tight for too long,
and we were just waiting for this event. What is
(38:32):
that black tail? What is the black swan?
Speaker 3 (38:36):
Event in the immediate term would be a growth scare
that the market has misperceived the amount of growth in
the economy, which I don't think is a high risk.
I think that we're going to have good enough growth
into next year that I don't see that as sort
of a shock that causes a repricing of risk. But
that would be one I think. The other one that
(38:59):
you have to worry about is that the AI bubble pops.
That certainly could be something, it seems very very early
for that. We see these headlines constantly and they grab attention,
but there hasn't been that many transactions. We could list
them all. I don't know we could use Maybe we
need all ten fingers, but we don't need our toes.
So there's been a handful of investment rate transactions. There's
(39:23):
been another handful of high yield deals, but by no
way is it a significant amount of the corporate credit
market or the economy as a whole. It looks like
it's going to be as time rolls on, with the
trillions of dollars being spent, we roll a year forward,
two years forward, it's going to be a pretty significant
(39:43):
percentage of the credit markets and the equity market, and
then at some point it's going to have to be
proven that these projects are profitable or not. And if
they're profitable, I think things will keep humming along. If
we find that most of them are not, then there's
going to be a severe reaction. I kind of think
about it as people like to talk about the dot
(40:04):
com era and the dot com bust. So Cisco in
nineteen ninety was growing faster than Nvidia. People forget that.
It was the darling of the era, and it grew
through all the nineties, and I don't recall the multiples
of earnings, but it was, I believe, higher than Nvidia
is now. And then in twenty twenty, for it was
(40:26):
it twenty twenty or twenty twenty one. The earnings kept
growing and all of a sudden they had a negative
net income year. The stock drop seventy five percent. So
the music stopped. Because these fiber optic build out projects,
we built too many of them, many of them didn't
make sense, they were never actually lit, and the whole
(40:47):
market collapsed. So Cisco was a fine company still around today.
So the strong will survive, but I could see something
like that happening a few years maybe maybe not where
we realized the profitability of these of this all this
AI spending. Some of it's going to be great, some
of it's going to be terrible, and there could be
a washout from that. I think that's going to take
(41:08):
some time. That is not you know, happening anytime soon
in the next six months. I think that would take
years to happen. So I when you use that dot
com analogy, maybe we're in nineteen ninety two, three four.
We're not in ninety nine, two thousand, two thousand and one.
It's going to take some time for us to get
built out well.
Speaker 2 (41:25):
I think the big difference between dot com and today
is dot Com created their own valuation multiples. They didn't
actually have revenues or cash flows being valued on eyeballs
or clicks versus today, you're actually seeing revenues pass through
the system. So I think that's why the level of
confidence is so much higher as well as it's really
the ones with the biggest balance sheets that are performing
(41:48):
the best as well, so well that it creates a
lot less concern.
Speaker 3 (41:51):
It's true to some extent, but on their hand, it's
maybe not true because the big companies are have rock
solid balance sheets. You could argue stronger than the US
government in some ways. Some people try to make that comparison.
But back then we had very strong companies Cisco that
I mentioned, Dell, Microsoft, those are very strong companies, but
then we had some silly ones. We have plenty of
(42:13):
unprofitable tech now that's trading on multiple of earnings that
should be coming in five years. You know, you can
list off the companies that are trading at two hundred
times earnings or even times sales. I think there was
a Bloomberg story this morning about I forgot who it
was trading at two hundred times sales. Well, you're trading
on earnings and cash flows that are coming many, many
(42:36):
years in the future, and so if those earnings don't appear,
those stocks can certainly drop fifty sixty, seventy percent. So
that's the phenomenon still true. Not with Google, Alphabet, Microsoft,
Meta and so on, and they're not going to I
don't think they're likely to drop like that, but these
unprofitable tech companies certainly could surprise in a really horrible way,
(43:00):
drop seventy five percent, and that will have a very
negative effect on the equity markets. We'll spill into everything else.
Speaker 1 (43:07):
And when it comes to fundraising, what's the appetite you
think from foreign investors to buy US corporate credit right now?
Speaker 3 (43:15):
Well, I think what's really hot right now for US
I can only speak for where we're being successful is
is multisector credit. So for the reasons we've spoken about,
I think the pitch of being able to rotate to
safe income is very People find it very attractive. So
if you can get the same income with less risk,
that's kind of the holy grail. And so we find
(43:37):
that people are resonating resonating with that very strongly because
they see the same things we see, and they're trying
to mitigate mitigate risks as the economy heats up. So
I think that's an area that we find a lot
of demand. But I think overall credit as a whole
is in demand, and you know, as long as the
yield is there, the demand will be there. So I
(44:00):
expect overall credit marks be very strong for twenty twenty six.
Speaker 1 (44:05):
Great stuff, Robert Cohen with Double Line. Has been a
great pleasure having you on the credit edge.
Speaker 3 (44:09):
Many thanks, oh thank you, glad to be here.
Speaker 1 (44:11):
Flats of fun, excellent and so Robert Schiffan with Bloomberg Intelligence,
thank you so much for joining us today. Thanks James
three even more analysis. Read all of Rob's great work
on the Bloomberg Terminal. Tech is his life. Call him.
Bloomberg Intelligence is part of our research department with five
hundred analysts and strategists working across all markets. Coverage includes
over two thousand equities and credits and outlooks on more
(44:32):
than one hundred market industries, currencies and commodities, and ninety industries.
Please to subscribe to The Credit Edge wherever you get
your podcasts. We're on Apple, Spotify and all other good
podcast providers, including the Bloomberg Terminal at b pod Go.
Give us a review. It really does help other people
find us. Tell your friends likewise or email me directly
at Jcromby eight at Bloomberg dot net. And we have
(44:54):
a fantastic lineup of guests for the rest of the year.
So keep on listening. I'm James Cromby. It's been a
great pleasu. Haven't you join us again next week on
the Credit Edge.
Speaker 2 (45:06):
H
Hello, and welcome to the Credit Edge Wiki Munkets podcast.
My name is James Crumby. I'm a senior editor at Bloomberg, and.
Speaker 2 (00:23):
I'm Rob Schiffman, a senior analyst covering tech at Bloomberg
Intelligence and co head of our US High Grade and
High Yield research teams. This week, we're a very pleased
to welcome Robert Kahn, the director of Global Developed Credit
at Double Line, the employee owned money management firm. Ay
doing today, Robert doing well?
Speaker 3 (00:39):
Thank you, happy to be here?
Speaker 2 (00:40):
Awesome? Oh great. For those of you who don't know Robert,
he joined Double Line in twenty twelve and is a
portfolio manager and the director of the GDC greup. He's
also a permanent member of the Fixed Income Asset Allocation Committee.
The firm manages around one hundred million dollars in client
assets and is among the most followed thought leaders on
the street. With a pre eminent fixing come franchise. We
(01:01):
are pumped to hear your views on credit markets and
to get some first hand insight into what the smart
money is doing. So, James, why don't you kick us off?
Speaker 1 (01:09):
Yeah? So, credit markets have brushed off a recent bout
of distress and are seeing a barrage of debt issuance,
mostly from tech companies looking to fund a gigantic buildout
of AI and associated infrastructure. Big tech has a lot
of cash on hand, but there's still concerned about how
this massive increase in spending will hit earnings. Meta the
Facebook and Instagram provider, so it's stocked. Priced tank by
(01:30):
more than ten percent last week, chopping off about two
hundred billion dollars in market cap, But that didn't stop
investors placing one hundred and twenty five billion dollars in
orders for a thirty billion fundraise on the same day,
setting the record for the biggest order book ever for
a corporate bond deal. Investors just can't get enough tech
bonds at the moment, it seems, and there's a lot
more to come in both public and private markets. But
(01:53):
anytime we see such massive demand for bonds or debt,
alarm bells do ring the FOMO The buy now are
questions later? Robert, is this a positive market signal? Are
you joining the gold rush into AI? Or should we
be a bit more cautious here?
Speaker 3 (02:07):
I think we're supposed to be cautious, so you to
zoom out a little bit when a sector of the
credit markets is small or nonexistent, and then this becomes
more frequent and then becomes large, which it's not yet,
but when it gets momentum, you're supposed to be cautious.
These transactions, particularly and particularly investment grade are sort of
(02:27):
novel in terms of the way they're structured, the features
in terms of being off balance sheet, and I think
you're supposed to be careful. Of course, we don't know yet.
It's unknowable at the moment whether these capital projects will
actually be profitable, and we also don't know how many
are ultimately will be built. You can think of it
as if you think of it more simply, it's really
(02:49):
they're building capacity. And when you build capacity and fixed assets,
sometimes you build too much or not enough. Because these
projects take time, they take years to put together. By
the time they come online, there might be I don't know,
there could be one hundred more projects coming online that
could be sufficient or insufficient. It's really unknown, So I
(03:09):
think you have to have a level of skepticism. Speaking
about the investment grade companies, they clearly have rock solid
balance sheets and so they can handle whatever comes of
these projects. If they build too much. Certainly, I don't
think it will be a material impairment for these for
the MAG seven so called MAG seven, these very large companies,
(03:33):
but for the projects themselves it could be a problem.
And of course there's a spill out over into other
areas of the economy. So these data centers use power,
they consume materials, they use chemicals. Who knows what the
spillover will be if the music stops. So I think
you have to be not only cautious about the tech sector,
(03:54):
but the tangential related sectors that are providing support for
these new projects.
Speaker 2 (04:01):
Yeah, I think there's a ton We're going to dig
into details more into this AI tech trade, but I'd
love to just get a little bit of a sense
from you and that this is such an industry driven
by short term results, and we're obviously seeing markets still rally.
How do you maintain a long term investment horizon in
(04:21):
your decision making when so many people are focused on
how you're outperforming today and tomorrow.
Speaker 3 (04:29):
Well, you can't focus on short term results. It's a
simple proposition that's hard to stick to. When markets get
rich in valuation, you're supposed to be cautious That could
lead to underperformance for a short period of time or
maybe not. It depends on the situation. But sticking to
investment discipline is the only tool in the toolkit. Really,
(04:52):
when the opportunities are light, then you have to be
stepping back. I think it's important to communicate to you
investors and tell them what you're doing, and when will
you outperform and when will you underperform? I think in
this current environment, double line telling investors that we see
the things that everyone else sees, we're thinking about them,
(05:12):
and we're cautious. I think that that helps our cause. Luckily,
our performance is good now. But as valuations get higher
and higher, is credit spreads get tighter and tighter, you know,
performance will be harder and harder to come by. If
we want to have a level of risk management, that's important.
So I guess I leave it there.
Speaker 2 (05:32):
Well just well, just let's set a baseline then, because
I've heard you say cautious now twice. So where do
you think fair value is right now for IG and
high yield? And what are those one or two things
that you're cautious about that you think that the market
is missing.
Speaker 3 (05:50):
Well, I think when you talk at a spread level,
you're kind of missing what's happening underneath the hood. So
I think it's more interesting to talk about the fact
that there's, at least in low investment grade a significant
amount of dispersion. And so I think it's all about
credit selection really more than anything else. Fair value at
the index level, I don't really think about it that way.
(06:11):
I think about fair value building up from our portfolio
name by name, and does it does do the credits
we own make sense? So when I talk about high dispersion,
what that means is if you take high yield, the
single BE index spread is about two eighty or so,
it's about where the index is. The index High held
(06:31):
index spread is about two eighty six. The spread on
the single B index is about the same. But there's
a lot of dispersion, meaning that there are many credits
that are much tighter than to eighty, and there are
many credits are much wider than to eighty. There are
some credits that are in the low two hundreds, there's
some credits that are a thousand over And according to
(06:52):
some research, I see the dispersion that that difference between
UH the names that are higher than the index spread
and and lower than the index spread is now the
eightieth six percentile, so it's only fourteen percent of the time.
Is the variation between spreads higher the loan index is similar,
I don't. I think it's in the seventies. So the
(07:13):
difference between the tightest spread and the lower and the
widest spread is still usually lower than it is now,
so only twenty five percent of the time this difference
is higher. So fair value I think you have to
look on on a credit by credit basis. If I'm
looking at a chemical company with deteriorating financials and an
(07:34):
uncertain outlook and it has a tight spread to the
hyield index, that seems pretty rich. If I'm looking at
a very stable, let's say, insurance business that's been growing
and has stable learnings and cash flows and is kind
of you know, on index or maybe a little tight
(07:54):
to the index, that seems that seems reasonable to me.
So what the market is doing is they're paying for quality.
So the tight spread credits are inside the index, and
the credits that have uncertainty are wide to the wide
of the index. Where they're talking about high yield bank
loans or investment grade for that matter. In the investment
(08:16):
grade space, for example, BDCs have widened out because there's
great concerns about BDC's the stocks have been sort of
repriced over the last few months. Worries about quite simply
rates falling interest rates don't help BDCs because they're floating rate.
But then credit concerns with the headlines of first brands
and so on, and so if you put that all together,
(08:37):
it's hard at the index level to say eighty base
points on the investment grade index as a whole, is
that the right price, or is two eighty six on
the on the high old index seem fair? I'd see
they both seem very tight and leave little room for mistake.
Is I guess the way I would characterize it, I
could say, you know what, maybe something that would be
(08:58):
quite fair quote fair ves value in a stable, growing
economy would be a little wider exactly how wide? I think,
even more from the bottom up, as I mentioned before.
Speaker 1 (09:11):
And when you go back to Tech and look at
that Robert, you know the deal we talked about Meta.
You know, they came out with initial price talk on
that new deal quite a bit wider than where they priced,
just because of the massive demand for those bonds despite
the fact that you know the stock price was tanking
on the same day. You know, what do you do
in that situation? Do you just not participate? I mean
(09:31):
you've kind of forced to, right.
Speaker 3 (09:33):
Well, we're not forced to. I think if you are
an active manager, which we are, we're not forced to
buy anything. So if there's a position that we don't like,
a credit we don't like, then we don't need to
own it. If there's something we like a lot, then
we do own it. I also point on you know,
most of the money we manage is multisector, and so
the pitch for that is if the corporate credit market
(09:56):
gets a little too nutty, then we can allocate to
other areas of the fixed income So we can stick
true to that discipline because we have the flexibility to
say no and move money around if necessary. So I
think active management is very important now. I think another
theme that maybe people don't talk about as much is
since the financial crisis, active management hasn't been as important
(10:19):
when rates are taken to zero because it's all sort
of liquidity trade where the worst credits actually perform the
best and the most unprofitable companies and the equity markets
outperform an environment where we're no longer in QE and
we have higher base rates. Credits need to live on
their own performance, and I think credit selection has been
(10:42):
very important twenty twenty five and will continue into twenty
twenty six. So I don't think you have to own anything.
I think you have to be careful, very careful of
credit selection, and I think credit selection will be rewarded.
It was rewarded this year with years not over yet,
but I think it will continue to be rewarded next year.
Speaker 2 (11:00):
There's a lot of layers to this credit selection, even
inside of credits. So for something like Meta one is
you know they should bonds as far out as with
fifty year maturities. Interesting to get your thoughts on how
people should evaluate tech names fifty years out and how
you value that. But more specifically, companies like this are
now issuing somewhat liquid private deals, and I'm wondering how
(11:25):
you're discerning between am I supposed to be owning a
more liquid public deal or something that's giving me a
little bit more yield through an SPV that might not
be as liquid. How are you determining fair value of
public versus privates within the same name.
Speaker 3 (11:43):
Well, to answer your second question, first, it depends on
where you're putting it. So people often pay for liquidity
when they don't need it, and so in a strategy
that does not need as much liquidity, maybe it's some
sort of SMA or private fund that we're managing where
we liquidity is not a primary concern, then we should
(12:04):
get paid for that ill liquidity, and we're happy to
do that, all else being equal, credit you know, credit
neutral rates neutral. If it's just less liquid and we're
putting in a place where it's appropriate, then that's totally fine.
We have other funds at our firm that have daily
liquidity demands, and so if we are accepting illiquidity, we
(12:25):
have to determine whether that's the right place. So that's
just a simple question of are you putting in the
right place? And then the question is does that SPV
have substantially more credit risk because of the nature of
the structure than the parent company. Of course it does,
and then you have to evaluate that credit risk. I
think that these are generally structured I'm speaking more broadly
(12:48):
now in a way that the credit risk is pretty
well buttoned up. So you're taking ill equity risk. I
think you're taking some extension risk depending on how these
projects unfold, and so those are acceptable and putting them
in the right place is fine in terms of thirty year.
You know, we're not super excited here at the firm
about long duration assets anyways, because we're worried about steepening curve,
(13:12):
and then of course when you layer credit risk on
top of that, it's not our favorite trade. So that's
not something that we're super excited about, like long duration
interest rate exposure to begin with, and then add long
duration tech exposure on top of that. That wouldn't be
our cup of tea, as people say, so not for us.
(13:33):
But you know, keeping it on the shorter end private
versus public, taking additional illiquidity risk, I think that's totally
fine as long as you're putting in the right place.
Speaker 2 (13:45):
And what was your view on the Bigniet deal? Did
you think that was fairly valued? You know that it's
one of these transactions that broke ten points higher than
we're we're priced. You know, how does that suit you?
Speaker 3 (14:03):
I wasn't super excited about it, to be honest. I
think it's neither fish nor foul. It's not really a
standard investment grade deal, and I think there's a lot
to look at in the high old space where you
can replicate a similar type of yield profile. So I
thought it was fine. I didn't think it was something
you had to buy. I'd say that. I think if
(14:24):
you bought, if you got it at new issue at
where it was originally priced, that that was interesting. But
then where it's trading in a market, I don't think
it represents anything really unique. Again, because you have to
get paid for the liquidity, for the extension risk. You
price all that in. You know the uniqueness of the
structure that's worth something, and so is it cheap. I
(14:46):
didn't think it was particularly cheap, but maybe it's fair value.
But it wasn't some kind of unique opportunity.
Speaker 2 (14:54):
And you've got better insight than most into what the
supply looks like over the next few months. So I
think the market was a little bit surprised by the
size of metas deals. Now we're sort of hearing whispers
of thirty eight billion coming out of Oracle. Alphabet does
(15:15):
more in dollars in euros than I think people would
have anticipated based upon what they're cashflow looks like, what
does the calendar look like to you? What are you
seeing in terms of people lining up private deals, people
lining up public deals. Are we going to see now
a standard sort of twenty five billion dollars at the
new size of the jumbo deal for the next six
(15:37):
to twelve twenty four months or these aberrations.
Speaker 3 (15:41):
Well, it's hard to predict exactly the size and timing,
but i'd stay from a higher level. We have been
below a trend in terms of issuance and M and
A transactions. These aren't M and A transactions, but in
terms of just overall corporate issuance has been down since
the pandemic. So corporate debt as a percentage of GDP
since twenty twenty has been going down. That's unusual when
(16:06):
you're not in a recession. So I would expect corporate
istionins to go up. Putting aside a for a second,
just because M and A normalizes and you get a
more normal M and A calendar, you get above trend
M and A, and then of course you have these projects,
these AI data center infrastructure build out projects. I think
we have substantial growth insuans. The exact size is a
(16:28):
little bit hard to pin down, partly because of timing.
There's a calendar effect. As we get to the end
of the year, you know, we probably have a couple weeks.
People don't want a price during Thanksgiving, they don't want
a price during Christmas. So what does the rest of
the year hold. I don't know, but let's say over
the next six months, I would expect a very strong calendar.
There is very strong demand. We know that the credit
(16:49):
markets overall are undersupplied, and so investors are happy to
receive more paper. You can see how these deals are subscribed,
how they trade on the break. Those are the indications
that the market is happy to see those, and then
in below investment grate inside we haven't seen any LBOs really.
We've seen the one electronic arts deal. We've seen that
(17:12):
BASF is selling their coding is business to Carlisle. We're
going to start to see things more of those types
of transactions as well. So I think it's going to
be busy both from the investment grade and blow investment
grade side into twenty twenty six. I think that will
be the story for twenty twenty six new issue.
Speaker 1 (17:30):
How much is double Line Patta spacing in this AI
new issue story right now, I mean you buying meso,
you're buying everything as it comes out.
Speaker 3 (17:37):
We're justly yeah, we're definitely not buying everything as it
comes out. Salesmen like to hear that you're buying everything
as it comes out. I mean, I would be everyone
every salesman's best friend if I said, yeah, we buy everything,
but no, absolutely not.
Speaker 2 (17:50):
I don't know.
Speaker 3 (17:50):
We had to account on the number of times I
use cautious, but I'm When you have an emerging sector
of the credit market, I think that you have to
be maybe use a different word, careful and and ad
mitigate how much exposure you have to these areas. There's
a technical perspective where people pile in and then all
(18:12):
of a sudden they you know, maybe don't they decide
they don't want as much as they as they bought
in the first place. These credits need to season, These
structures need a season because they're somewhat novel. So we're
certainly not buying every deal. We're actually buying a well
I should say holding. Sometimes we buy and then we trade.
But overall exposure i'd say is modest.
Speaker 1 (18:34):
And in terms of expressing that caution, are you buying CDs?
I mean the oracle CDs popped up, and I think
METS is going to come out with CDs because it's
the man for it. But are you hedging yourself through
the swoops?
Speaker 3 (18:46):
We can do that, but we would do that more
as a strategic position as opposed to a risk management perspective.
If we own too much of something, we're in a
position where we can just sell that exposure in the
cash market, So we can use CDs really more firstategic
purposes if we think that there's a way to buy
something cheap that way, But we really use CDs as
(19:07):
a risk management tool, I'd say quite lightly. That's just
the way our firm operates. We tend to be managing
on a cash basis. We like to buy and hold
exposure that we can manage and move in and out of,
So we don't like to own so much of something
that we're stuck in it and have to use synthetic
tools to mitigate risk. That's just our style, So that's
(19:31):
how we operate.
Speaker 2 (19:34):
The market has shifted somewhat from banking syndicates to buy
side syndicates. Are you guys approaching companies on private deals
as anchor tenants or syndicated transactions for names or projects
that you like, And is that a real opportunity where
(19:55):
again you can get in at much better levels than
where something ultimate trades when there's liquidity.
Speaker 3 (20:03):
I'd say broadly no, there are specific situations where we
know a credit well, I'd say, I have to zoom
back and say, our philosophy here is that there are
credits that we have covered here for a very long time.
We know the companies, we know the management team, we
know how they operate in good times and bad, and
we're happy to provide them capital either in a direct
(20:24):
way or indirect way as the opportunities come. But you know,
we're not what you would consider a private credit firm overall,
so we don't have a bunch of bankers knocking on
doors to you know, help finance their businesses. We're more
passive in our orientation where we generally speaking, are looking
(20:44):
with the market gives us and we decide what to
buy or sell based on what's out there in the market,
and it's to select few opportunities where we think that
there's a specific situation where we have a relationship. What
we lean into let's say that's the minority as post
of the majority of what we do. And we've definitely
been vocal about our views on private credit, which I
(21:06):
can get into for a minute. I'm in private credit
in twenty twenty was an outstanding opportunity, and we participated
in ways we could to provide capital when the capital
markets were frozen, and those were epic opportunities where you
had double digit yields with amount of security that made
the risk of impairment deminimous. In my estimation, that turned
(21:29):
out to be true the way those seasoned fast forward
to today, I don't think there's any alpha in private credit.
I put out a video in twenty twenty three that
I believe is posted on the double Line website where
I thought that the returns of private credit and public
credit would converge so effectively be no benefit to being
in private credit. There has to be a yield benefit,
otherwise you're not getting compensated for the liquidity, for the
(21:54):
concentration risk, for the credit risk. To me, if I
think about private credit today, it's just a riskier cohortive credits.
It's not bad or worse, it's just a different positioning
they're mostly B three B minus. They tend to be
more concentrated, holding larger positions, often with a software tilt
to it. So that's a different trade. You know, you
(22:17):
could say whether you like it or not, but it's
different than investing in the High Old Index or the
Bank Loane index. Those are broadly diversified, they're higher in
credit quality, and of course they're liquid. You can trade,
you know, depending on the strategy, you can be in
a daily liquity fund where you can get in and
out every day. So it's a completely different trade. And
(22:39):
because those spreads have compressed and the returns have compressed,
I don't think there's a big opportunity there. Frankly so,
and some of the private credit managers have gone publicly
and said that expect lower returns. I believe Blackstone. The
Blackstone CEO John Gray was in the press somewhere saying
expect lower returns. So if you're going to get mid
(23:00):
to high single digit returns in private credit, well that's
what ail index is doing here to date so far.
So where's the advantage That would be my question, And
that goes to your question about chasing companies directly. If
you're trying to finance a company right now, directly you're
competing on fees and terms, and I don't think it's Uh,
we don't want to get into that environment where we're
(23:23):
winning by the tightest spread in the loosest terms. I
don't think that's something we want to be doing. So
we don't think we have a competitive advantage in terms
of anything else, like in terms of providing financing to
someone on an with a set of terms, and so
it's not something we're really super excited about now, although
in twenty twenty we were very excited about it because
(23:44):
if we're one of very few people providing capital, then
we get pricing and we get terms, we have the
structure we want, then that's that's quite exciting. Then we
want to lean into it. Definitely.
Speaker 1 (23:53):
It's a really interesting debate you've hit on. You know,
we've discussed this for some time. I remember this time
last year we were talking with PIMCO the advantage in
public and private. They said at that time, I think
that there was about a one hundred basis points advantage
to going private and you know, sacrificing liquidity. Then we
you know, come May, we were talking to Dimensional, which
(24:13):
had a very academic approach, and they actually found over
a long term that high yield public high yield did
better than private And then switched back to a couple
of weeks ago, and we had Blackstone on this show
talking about a two hundred basis points premium on private
IG over public IG. And then we got into the
whole area bespoke financing and you know, you're tailoring it
(24:36):
to your exact needs all that stuff. So people are
kind of all over the place in terms of where
they think private might shake out. And also I would
add that your colleague Jeff Gundlack at our event in
the summer compared private credit to CDOs, which obviously blew
up the financial world and the rest of the world
in two thousand and eight. So there's so much divergence.
(24:57):
Don't you find, though, that your your end use is
your customers want private because that's what's host at the moment.
Speaker 3 (25:04):
I actually know, I think that there's been such a
boom in private credit that I think our clients are
actually asking questions of the level of skepticism. They know
that they're called constantly from private credit managers with the
newest fund they've committed a lot of capital. I think
in some cases the returns have been good. Sometimes in
some cases the returns have not been so good, and
(25:26):
they're not clamoring for more of it. If anything, they're
interested in alternatives ways to diversify their exposure away from
private credit, and those are the types of solutions we're providing.
You mentioned how people have been quoting how you there's
a yield advantage in private versus public, different managersment mentioning
different yields. I point out that yields are not returns.
(25:50):
So there could be credits that have a higher yield
but ultimately become impaired and the returns are lower or
at least get marked down for some period of time,
so you can uh. I mean in the public market,
you see that bank loans versus HIG yield, bank loans
yield more, and I have I have a total return
that that is lower than the high old market. So
I think it's very important to point out that that
(26:11):
yields are not returns. Uh. But no, uh uh, back
back to what I was saying before. If anything, we're
getting more clients asking questions about private credit, and the
number of questions seem to be increasing in frequency, where
it was more of a trickle. Now it seems like,
I don't know. Several times a week people want to
know what do we think about private credit, what do
we think about the credit markets overall? And how do
(26:33):
we put this all together?
Speaker 2 (26:35):
So again I'm just hearing hints of caution and I'm
I'm trying to squeeze out now, how you convert in
those yields out there to return? So where do you
see the best opportunities, what are the sectors, what's the duration,
what are the ratings? How do we hone in on
how to outsmart? How to outsmart this market?
Speaker 3 (26:57):
Yeah, well, I can tell you what we're doing. Maybe
that's the easiest way to do it. And we have
strategies that have a variety of different risk profiles, so
I can start more general and we can get specific
if you want. But we have been as a firm
trimming credit risk. I feel like maybe for eighteen months.
We do it very gradually. So a credit we liked
(27:18):
that was a nine percent bond gets refired into a
six percent bond. We don't think it should be six percent,
and we just let it go. We're worried about sectors
in the corporate credit market. We've been worried about, you know,
some of the cyclical stuff like chemicals, worrying about the
housing market because housing market. The housing market has been
languishing because of high rates, and so our housing exposure
(27:41):
goes down and then you go and sell on and
sell retail other sectors. So as we raise cash in
these sectors, then we have to do something with it.
We've been moving it in some cases last year when
spreads we're tight, moved it to treasury and agency mortgages,
which worked out fabulously when we have the taper tan
not the tape. And it was a long time ago,
(28:01):
the tariff, the Liberation day. So when Liberation Day happened
and we were sitting with higher exposures to treasuries and
agency mortgages, that look great. And of course there was
a great buying opportunity that lasted for a moment and
then spread snap right back. So now if you look today,
it looks the same as it did at the beginning
of the year. What are we doing now the same
(28:22):
concerns that I just mentioned. Rotating out of some of
the cyclical names, sickle sectors, we like other sectors of
the fixed income market better. We like CMBs. Why because
sectors that get beaten up CMBs got really walloped during
the pandemic. Those tend to have the tightest underwriting standards.
And CMBs assets have been repriced. So if they were
(28:46):
marked at one hundred and now they're marked down to thirty, well,
if the thirty is probably more realistic, particularly if it
actually traded, but traded hands at thirty, you know that
the value is thirty, not one hundred, and so it's
easier to lend when you have that sort of marked
to market and the under ranting standards are are tight.
And so if I can get high corporates are in
high sixes, If I can get high sixes in a
(29:07):
CMBs structure that has more conservative lendings, more conservative structure
in terms of lending standards, and I now know what
the asset is worth, those are interesting. And CMBs, of
course is not just office space. It's industrials and hospitals
and all sorts of things mixed in their residential and
(29:27):
so it's a mix of assets, and you can construct
a portfolio that has the right risk profile. Non agency
residential mortgage back securities. Most housing activity has been an emic.
But what that means is most borrowers have a very
large cushion in terms of equity cushion, and so if
you have a thirty forty percent equity cushion, then the
(29:47):
risk of impairment if something bad happens. The real estate
market is low, and just like CMBs, underwriting standards have
been very tight. So while you could argue that underwriting
standards in corporate credit are loose, in that market, they're tight.
So we've been moving, we've been allocating more money away
from corporate credit over the last year or so. And
(30:08):
so if you look back in time, maybe in twenty
twenty two, twenty three, twenty four, twenty twenty two, we
had spread wide now a lot, and I thought at
the time the corporate credit was quite cheap. I thought
that we should be overweight corporate credit, which we were
at the time, So we had more corporate credit than
some of the other things I just mentioned. R and
(30:29):
BS might have been a very small allocation at the time.
But then as we move forward in time and credit
spreads tightened and we had to reallocate, and so we've
moved from being maybe more corporate focused to now more
focused on some of these securitized sectors. That's how we're
solving the puzzle right now.
Speaker 1 (30:50):
Not all of that has done well though. There have
been some blow ups eating on the triple as in
some of those. I mean, they maybe are idiosyncratic, but
do you have to do more credit work now to
analyze those structures.
Speaker 3 (31:00):
Well. I think the blow ups are the opportunity in
a way, because I said sectors that are under stress,
once they come through that stress tend to be quite
clean for the next few years. In the corporate credit market,
the analogous sector with the energy energy, there is a
wave of shale financing in the high old space and
I don't know was that twenty thirteen, twenty fourteen, something
(31:23):
like that, and then oil went from one hundred to
thirty and there was a wave of defaults. Many of
those companies were wiped out, some still limped along, and
then we had the pandemic where famously oil went negative
in May of twenty twenty, and then we had another
wave of defaults. Now you look at high old energy,
it's very clean. The companies are self funding, they have
(31:43):
low leverage, they generate cash flow, and so what was
the most dangerous part of the credit markets or the
high old corporate markets, I should say energy is now
one of the safest and so we're applying that same
sort of logic with CNBAS. What was quite dangerous in
twenty twenty and has gone through this period of stress,
we think is actually one of the areas that's most
(32:04):
stafe because investors become you know, shell shocked from it
and don't want to touch it. Well, when that's the when,
when that happens, that's actually a great environment to invest in.
So that's why we we think that that's very interesting
right now.
Speaker 1 (32:20):
Right right when you look at the returns of this year,
it's kind of interesting that the investment grade debt has
done better than the junk you know, Triple b's of
wayout performed Triple c's, possibly because of the fear around
cockroaches and all this stuff at the post end of
the market. But it doesn't often happen that in a
very risk on year, like you know, Trump gets re
elected and everyone's risk one again. But but what's happened
(32:41):
to junk bonds? Are you are you really long I
G and then short high yield as a result, and
are you worried at all about potential releveraging because of
M and A. You know, potential slowdown in earnings. You know,
the economy might start to sputter. Is there is there
risk in I gent?
Speaker 3 (33:00):
Well, I think I'd first say that if you look
at the returns where investment grade is outperforming high yield,
a lot of that is duration. So if you look
at access returns, look at it right now, double b's
have actually outperformed on an access return or yield or
return over over treasuries more than triple b's. Double b's
are up on an access basis around two and a
(33:22):
half percent, Triple b's only one twenty eight. So on
an access basis, you'd be better off in high yield.
On a toll return basis, the duration has helped investment
grade credit. I think if you look where where we
are now, we are in a carry environment, that spreads
could tighten a little bit more. I can't say that
you know this is the end. We could certainly go tighter,
(33:44):
but let's just say there's a lot more room to
widen than tighten. It's quite asymmetric. So in a carry year,
and if you're in an environment where credits threads are
very tight, and it's all about carry. Then again, you
want to think about credit risk and up in quality
is certainly a mantra that we have been saying at
double line for a while. We tell our clients what
(34:05):
are we doing? When we tell them what we're doing
with their portfolios, we are moving up in quality. So yes,
that's more investment grade than high yield. In terms of duration,
that's a little different, so we are inside the index.
In terms of duration, the investment grade index is what
six duration of six or so, we've been focusing on
(34:27):
the ten years in in basically keep it to keep
it simple. So we think that the long end has
risk of steepening further, and so we don't want to
be exposed there and we wont want to be up
in quality in terms of credit quality. So I think
that the trend of investment grade being competitive, I don't
(34:48):
know if it's going to outperform, but certainly competitive with
investment with high yield next year, I think that that's
definitely in the cards. I thought that investment grade would
be competitive with I yield this year. I didn't necessar
predict as much of a duration rally as what occurred,
so it turned out to actually outperform, but I thought
it would perform well because of the phenomenon of weaker
(35:10):
credit deterioration and the dispersion that I talked about earlier.
I think that story continues into next year, where the
dispersion is continues, you know dispersion. Usually it results itself
one of two ways. You get a tightening of all
this so that the you know, single B, triple c's
that are wide join the type market. Where you get
(35:31):
it tight where everything is tight, or you get widening. Now,
we already had the type market that was that was
last year where everything was spreads. Spreads were all compressed
within one range depending on rating, and then we've been
slowly decompressing. I think that decompression continues over time. It
usually starts with a sector. So we've been worried about
(35:53):
real estate for a while because of high rates. Then
you add chemicals, then you add retail. People are worried
about the consumer. When you are adding things to the list,
That growing list tends to keep going. You keep adding
things to the list, and then all of a sudden,
spreads widen a little bit and then they wilden a
little bit more. But this could take some times, so
(36:15):
this isn't something that all of a sudden the economy
falls apart on January first. I don't think that. I
think that this could take a couple of years to
play out. I think the liquidity in the market, the
AI spending, the FED lowering rates, deregulation coming, fiscal spending,
all that we've got. I don't know how many how
much stimulus is coming, there's a lot of it, and
so betting against all that stimulative impulse into the economy
(36:39):
is that would be a strong position to take. I'm
not taking that. I think what more likely to happen
is that we continue with the trend we're going where
we have some simmering, simmering stress under the hood, but
the market keeps roaring with these big mega deals, big
mega AI deals, The blow investment grade market ramps up
(37:03):
LBO activity, and I actually think we are likely to
have a leg up and risk the equity markets find
new hides next year. Multiples expand, credit spreads stay very tight,
and instead of a decline in corporate credit as a
percent of GDP, we start to see a resurgence, a
growth in corporate credit as a percentage of GDP, and
(37:26):
we see growth in the overall number of issuers in
the investment grade and hyld market, and that would set
the table for instead of caution, maybe concern. We go
from caution to concern under under that scenario, and I'm
waiting for that. I think that that's probably at least
a year away. It could be two years. The timing
is very difficult to predict. So that's where I think
(37:49):
we're going.
Speaker 2 (37:51):
Well, you started to list out a wall of worry.
I think that's our life is fixed income analysts, as
that's all we do is worry. But what actually has
to get up to that next leg? It sounds like
you're also describing a little bit of a Goldilock scenario
where spider tight but the fundamentals are fine, and from
(38:12):
a fiscal policy standpoint, it's also positive. What has to happen,
Like we've seen a couple of these one off blow ups,
What has to happen for this market to go significantly wider,
for people to lose confidence, for everyone to say wow,
this We knew this was way too tight for too long,
and we were just waiting for this event. What is
(38:32):
that black tail? What is the black swan?
Speaker 3 (38:36):
Event in the immediate term would be a growth scare
that the market has misperceived the amount of growth in
the economy, which I don't think is a high risk.
I think that we're going to have good enough growth
into next year that I don't see that as sort
of a shock that causes a repricing of risk. But
that would be one I think. The other one that
(38:59):
you have to worry about is that the AI bubble pops.
That certainly could be something, it seems very very early
for that. We see these headlines constantly and they grab attention,
but there hasn't been that many transactions. We could list
them all. I don't know we could use Maybe we
need all ten fingers, but we don't need our toes.
So there's been a handful of investment rate transactions. There's
(39:23):
been another handful of high yield deals, but by no
way is it a significant amount of the corporate credit
market or the economy as a whole. It looks like
it's going to be as time rolls on, with the
trillions of dollars being spent, we roll a year forward,
two years forward, it's going to be a pretty significant
(39:43):
percentage of the credit markets and the equity market, and
then at some point it's going to have to be
proven that these projects are profitable or not. And if
they're profitable, I think things will keep humming along. If
we find that most of them are not, then there's
going to be a severe reaction. I kind of think
about it as people like to talk about the dot
(40:04):
com era and the dot com bust. So Cisco in
nineteen ninety was growing faster than Nvidia. People forget that.
It was the darling of the era, and it grew
through all the nineties, and I don't recall the multiples
of earnings, but it was, I believe, higher than Nvidia
is now. And then in twenty twenty, for it was
(40:26):
it twenty twenty or twenty twenty one. The earnings kept
growing and all of a sudden they had a negative
net income year. The stock drop seventy five percent. So
the music stopped. Because these fiber optic build out projects,
we built too many of them, many of them didn't
make sense, they were never actually lit, and the whole
(40:47):
market collapsed. So Cisco was a fine company still around today.
So the strong will survive, but I could see something
like that happening a few years maybe maybe not where
we realized the profitability of these of this all this
AI spending. Some of it's going to be great, some
of it's going to be terrible, and there could be
a washout from that. I think that's going to take
(41:08):
some time. That is not you know, happening anytime soon
in the next six months. I think that would take
years to happen. So I when you use that dot
com analogy, maybe we're in nineteen ninety two, three four.
We're not in ninety nine, two thousand, two thousand and one.
It's going to take some time for us to get
built out well.
Speaker 2 (41:25):
I think the big difference between dot com and today
is dot Com created their own valuation multiples. They didn't
actually have revenues or cash flows being valued on eyeballs
or clicks versus today, you're actually seeing revenues pass through
the system. So I think that's why the level of
confidence is so much higher as well as it's really
the ones with the biggest balance sheets that are performing
(41:48):
the best as well, so well that it creates a
lot less concern.
Speaker 3 (41:51):
It's true to some extent, but on their hand, it's
maybe not true because the big companies are have rock
solid balance sheets. You could argue stronger than the US
government in some ways. Some people try to make that comparison.
But back then we had very strong companies Cisco that
I mentioned, Dell, Microsoft, those are very strong companies, but
then we had some silly ones. We have plenty of
(42:13):
unprofitable tech now that's trading on multiple of earnings that
should be coming in five years. You know, you can
list off the companies that are trading at two hundred
times earnings or even times sales. I think there was
a Bloomberg story this morning about I forgot who it
was trading at two hundred times sales. Well, you're trading
on earnings and cash flows that are coming many, many
(42:36):
years in the future, and so if those earnings don't appear,
those stocks can certainly drop fifty sixty, seventy percent. So
that's the phenomenon still true. Not with Google, Alphabet, Microsoft,
Meta and so on, and they're not going to I
don't think they're likely to drop like that, but these
unprofitable tech companies certainly could surprise in a really horrible way,
(43:00):
drop seventy five percent, and that will have a very
negative effect on the equity markets. We'll spill into everything else.
Speaker 1 (43:07):
And when it comes to fundraising, what's the appetite you
think from foreign investors to buy US corporate credit right now?
Speaker 3 (43:15):
Well, I think what's really hot right now for US
I can only speak for where we're being successful is
is multisector credit. So for the reasons we've spoken about,
I think the pitch of being able to rotate to
safe income is very People find it very attractive. So
if you can get the same income with less risk,
that's kind of the holy grail. And so we find
(43:37):
that people are resonating resonating with that very strongly because
they see the same things we see, and they're trying
to mitigate mitigate risks as the economy heats up. So
I think that's an area that we find a lot
of demand. But I think overall credit as a whole
is in demand, and you know, as long as the
yield is there, the demand will be there. So I
(44:00):
expect overall credit marks be very strong for twenty twenty six.
Speaker 1 (44:05):
Great stuff, Robert Cohen with Double Line. Has been a
great pleasure having you on the credit edge.
Speaker 3 (44:09):
Many thanks, oh thank you, glad to be here.
Speaker 1 (44:11):
Flats of fun, excellent and so Robert Schiffan with Bloomberg Intelligence,
thank you so much for joining us today. Thanks James
three even more analysis. Read all of Rob's great work
on the Bloomberg Terminal. Tech is his life. Call him.
Bloomberg Intelligence is part of our research department with five
hundred analysts and strategists working across all markets. Coverage includes
over two thousand equities and credits and outlooks on more
(44:32):
than one hundred market industries, currencies and commodities, and ninety industries.
Please to subscribe to The Credit Edge wherever you get
your podcasts. We're on Apple, Spotify and all other good
podcast providers, including the Bloomberg Terminal at b pod Go.
Give us a review. It really does help other people
find us. Tell your friends likewise or email me directly
at Jcromby eight at Bloomberg dot net. And we have
(44:54):
a fantastic lineup of guests for the rest of the year.
So keep on listening. I'm James Cromby. It's been a
great pleasu. Haven't you join us again next week on
the Credit Edge.
Speaker 2 (45:06):
H
Host
James Crombie
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