Invesco is buying real estate investment trust debt and preferred bonds from banks, betting that the US economy stays strong and interest rates eventually fall. “If you’re looking at yield, it is kind of a golden age for bonds,” says Matt Brill, the $1.6 trillion money manager’s head of North America investment-grade credit, in the latest Credit Edge podcast from Bloomberg Intelligence. “You’re getting paid to wait and at some point here, you’re going to get that kicker of the Fed starting to cu...
May 23, 2024•47 min
Household debt is a good investment as the US economy remains strong, Jeremy Forster, portfolio manager at Wellington Management, says in the latest Credit Edge podcast from Bloomberg Intelligence. “We do still think that the US consumer is in really good shape,” he tells Bloomberg News’ James Crombie and Bloomberg Intelligence Senior Credit Analyst Arnold Kakuda. Forster expects “compelling” returns in fixed income for 2024, which he thinks will be the year of the bond. In addition, Wellington ...
May 16, 2024•40 min
Rising private credit stress will inflict losses on investors and spur volatility, Jerry Cudzil, portfolio manager at TCW Group, says in the latest Credit Edge podcast from Bloomberg Intelligence. “Default rates are going to pick up in a really material way in private credit,” he tells Bloomberg News’ James Crombie and Bloomberg Intelligence Senior Credit Analyst David Havens. “We are currently seeing some real stress,” says Cudzil, who expects “accidents” as documentation weakens and pay-in-kin...
May 09, 2024•36 min
Western Asset Management Co. sees “compelling” opportunities in commercial real estate debt, Co-Chief Investment Officer Michael Buchanan says in the latest Credit Edge podcast from Bloomberg Intelligence. This includes loans for warehouses, distribution centers and hotels, he tells Bloomberg News’ James Crombie and Bloomberg Intelligence Senior Credit Analyst Stephen Flynn, adding that the firm is cautious on offices. In addition, Western Asset likes collateralized loan obligations and debt fro...
May 02, 2024•49 min
Altice ‘Jenga Tower’ Menaces Global Credit Markets (Podcast)Altice distress is ripping through global credit markets and setting some ugly precedents for debt investors. Aidan Cheslin from Bloomberg Intelligence joins Irene Garcia Perez, Eleanor Duncan and James Crombie with Bloomberg News to discuss the ongoing drama. Billionaire owner Patrick Drahi has taken a combative approach to creditors, who are joining forces in an effort to avoid steep losses. Credit rating downgrades and asset price fa...
Apr 25, 2024•36 min
Corporate debt markets are poised to perform well provided monetary policy doesn’t get tighter, according to Morgan Stanley. “As a credit investor, the thing that matters most is that the next Fed policy action is not a hike,” Vishy Tirupattur, the bank’s chief fixed income strategist, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Spencer Cutter. “The bar for a hike is very high,” he adds. Morgan Stanley still expects three rate cuts from the Federal Reserve this year, startin...
Apr 18, 2024•40 min
The threat of weak companies not being able to pay their debts is rising as interest rates stay elevated. “On high yield and loans, I do think that risks are growing that you could see a reset in spreads,” Meghan Robson, head of US credit strategy at BNP Paribas, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Mike Holland. “The obvious trigger for us would be that debate of rate hikes coming back,” Robson says in the latest Credit Edge podcast. BNP favors shorting some single B...
Apr 11, 2024•35 min
Europe’s largest asset manager, Amundi, expects Additional Tier 1 bank bonds to extend gains in what it sees as a broadly positive market for corporate debt. “We’re obviously in this kind of Goldilocks scenario, I think, where the central bank put remains on the table,” Steven Fawn, head of global credit at Amundi Asset Management, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Stephane Kovatchev. “Sub-debt is one part of the market which we like,” Fawn says in the latest Credi...
Apr 04, 2024•44 min
Altice’s debt woes pose a threat to the collateralized loan obligation market, says Gunther Stein, chief investment officer for US performing credit and CLOs at Sound Point Capital Management. “Altice is clearly an issue for Europe, and in particular the European CLO market,” Stein tells Bloomberg News’ Carmen Arroyo and James Crombie and Bloomberg Intelligence’s Robert Schiffman in the latest Credit Edge podcast. “It’s something we all have to be thoughtful around in terms of how we’re managing...
Mar 28, 2024•35 min
Credit investors aren’t getting enough compensation for corporate credit risk, says Matthew Eagan, a portfolio manager and head of the full discretion team at Loomis Sayles & Co. “Judging from the spread levels, I think they’ve gone a bit too far,” Eagan tells Bloomberg News’ Lisa Lee and James Crombie and Bloomberg Intelligence’s Stephen Flynn in the latest Credit Edge podcast. He sees investment grade debt as an opportunity, given decent corporate earnings and the fact that debt costs are ...
Mar 21, 2024•43 min
Asset-based lending is set to expand over the next 10 years at the same heady pace as private credit, according to Bruce Richards, CEO and Chairman of Marathon Asset Management. “The $100 billion middle-market lending and private-credit lending business in 2008 which grew to $1.7 trillion where it is today — a 17-fold increase — you’ll see the same thing happening in ABL in this next decade,” he tells Bloomberg News’ Lisa Lee and James Crombie and Bloomberg Intelligence’s Arnold Kakuda, in the l...
Mar 14, 2024•46 min
Credit derivatives and securitizations offer high yields and can perform well even if the US economy tips into recession, says Jonathan Dorfman, managing principal and chief investment officer at Napier Park Global Capital. “In credit, for the first time in 15 years, you can actually create portfolios that give equity-like returns,” he tells Bloomberg News’ Lisa Lee and James Crombie and Bloomberg Intelligence’s Tolu Alamutu, in the latest Credit Edge podcast. Standardization and improved transp...
Mar 07, 2024•37 min
Financial institutions are selling off consumer loans under pressure from regulators, setting up investors for significant gains, according to Mark Jenkins, head of global credit at Carlyle Group Inc. “Banks in the US in particular are managing down their risk-weighed assets, and that is creating a deluge of opportunities for us,” he tells Bloomberg News’ Lisa Lee and James Crombie, and Bloomberg Intelligence’s Robert Schiffman, in the latest Credit Edge podcast. Debt being offloaded by banks in...
Feb 29, 2024•37 min
Buyers of distressed real estate debt stand to make significant gains over the next few years, according to Joshua Pack, co-CEO at Fortress Investment Group. “This is going to be a trillion-dollar opportunity,” he said. Pack discusses how Fortress is getting ready for “a massive restructuring” in the sector with Bloomberg News’ Lisa Lee and James Crombie and Bloomberg Intelligence’s Tolu Alamutu in the latest Credit Edge podcast. The impact on banks will be long-lasting and not limited to smalle...
Feb 22, 2024•39 min
US-style creditor-on-creditor violence spreading to Europe is a worry for loan investors, according to Camille McLeod-Salmon, portfolio manager at Fidelity International. “What we are focused on is this move that’s in the US towards creditor-on-creditor violence — and the shift that you’ve had there — and that translating into Europe,” she said. London-based McLeod-Salmon talks to Bloomberg News’ Lisa Lee and James Crombie and Bloomberg Intelligence’s Aidan Cheslin in the latest Credit Edge podc...
Feb 15, 2024•37 min
Geopolitics are a potential menace to public debt markets that could present opportunities for private lenders, according to Mike Dennis, co-head of European credit at Ares Management. “The capital markets in general are still pretty fragile,” Dennis tells Bloomberg News’ Lisa Lee and James Crombie in the latest Credit Edge podcast. “It wouldn’t take much for that liquidity to reverse out of the system,” he said. Volatility may open the door for private credit firms to participate more in larger...
Feb 08, 2024•38 min
Collateralized loan obligations are among the best debt investment opportunities for this year, according to John Wright, global head of credit at Bain Capital. Spreads on the structured investment vehicles, which repackage leveraged loans into bonds of varying risk, may tighten further, even as default rates rise, Wright tells Bloomberg News’ Lisa Lee and James Crombie and Bloomberg Intelligence’s Mike Holland in the latest Credit Edge podcast. He also sees robust potential for growth in India ...
Feb 01, 2024•38 min
The US economy is at risk of tipping into recession in the second half of this year, putting pressure on corporate debt markets, says Chris Alwine, global head of credit at Vanguard. “What would precipitate that shallow recession is that corporations are just not hiring, with a modest increase in layoffs,” said Alwine. Vanguard, one of the biggest money managers in the world, with $8.6 trillion in assets, is cautious on junk-rated debt, Alwine tells Bloomberg News’ Lisa Lee and James Crombie and...
Jan 25, 2024•46 min
Private debt needs to get better at explaining itself as the $1.6 trillion asset class goes mainstream, according to James Reynolds, global head of direct lending at Goldman Sachs. “We collectively need to just demystify what we do — which is in simple words, lending to corporates,” Reynolds tells Bloomberg News’ Lisa Lee and James Crombie and Bloomberg Intelligence’s David Havens in the latest Credit Edge podcast. Goldman wants to double the size of its $110 billion private credit business. Rey...
Jan 18, 2024•37 min
Private-debt firms are set to consolidate as larger companies dominate deal flow, according to Marc Chowrimootoo, portfolio manager at Hayfin Capital Management. “We’re seeing a concentration within fewer hands,” Chowrimootoo tells Bloomberg News’ Lisa Lee and James Crombie and Bloomberg Intelligence’s Julie Hung in the latest Credit Edge podcast. “That trend is going to continue.” He identifies debt refinancing as the big opportunity for private lenders in 2024. Hayfin likes the health-care and...
Jan 11, 2024•34 min
Commercial real estate faces a tough 2024 as trillions of dollars in debt comes due and refinancing gets harder, according to Neil Callanan, corporate finance czar at Bloomberg News. Offices in financial centers are especially under pressure after banks tightened lending standards, Callanan tells Bloomberg senior editor James Crombie in the latest episode of the BI Credit Edge Podcast. He’s watching for delayed and canceled new projects and short selling of real estate companies as signals of di...
Jan 04, 2024•31 min
New entrants to the rapidly-growing private credit market, scrambling to deploy capital as demand exceeds supply, risk making loans that don’t perform well, according to Alan Schrager, senior partner and portfolio manager at Oak Hill Advisors. “You sort of love private credit tourists who potentially do bad deals, because bad deals that ultimately you don’t own make you look good on a relative basis,” Schrager says. “Even though we do think private credit is really cheap, we are trying to stay h...
Dec 21, 2023•52 min
Private credit will hog the limelight in 2024, with ever-larger deals and continued expansion, even as high rates and a slowing economy add risks. To discuss the outlook for next year, Paula Seligson and Lisa Lee — senior reporters in Bloomberg’s global private credit news team — join senior editor James Crombie in the latest episode of the Credit Edge podcast. Private debt will likely attract more investors — and the attention of regulators seeking transparency. Also in this episode, Bloomberg ...
Dec 15, 2023•33 min
More companies will default on their debt next year because of higher rates and slower earnings, but there won’t be a widespread crisis, says Christopher Sheldon, co-head of credit and markets at KKR. “We don’t think it’s Armageddon,” he tells Bloomberg News senior reporter Lisa Lee and senior editor James Crombie in this episode of the Credit Edge podcast. He expects continued stress in the retail and health-care sectors — and also sees big opportunity in asset-based finance. In addition, Bloom...
Dec 08, 2023•40 min
Private credit offers double-digit returns with structures that can reduce risk, just as increased competition boosts secondary trading options, says Mark Attanasio, co-founder of Crescent Capital. “We don’t see a bubble yet,” he tells Bloomberg News senior reporter Lisa Lee and senior editor James Crombie in this episode of the Credit Edge podcast. He avoids transport and energy, but is looking to participate in private loans in other sectors across the US and Europe. Attanasio also discusses t...
Nov 30, 2023•36 min
When fast-food chain Raising Cane’s tapped the US capital market this month, it revealed a $7.6 billion fortune held by CEO Todd Graves. Strong demand for the chicken-finger maker’s bonds highlights growing investor appetite for risky debt as the US economy appears headed for a soft landing, Bloomberg News reporter Michael Tobin tells Bloomberg senior editor James Crombie in this episode of the Credit Edge podcast. And it shows consumer spending holding up despite inflationary pressures, Tobin s...
Nov 22, 2023•22 min
Private credit’s rapid growth and lack of transparency are concerns to be monitored as funding costs jump, says Fraser Lundie, head of fixed income at Federated Hermes in London. Steep rises in interest payments for lower-rated companies are “not going to be absorbed cleanly and easily,” he tells Bloomberg News senior reporter Lisa Lee and senior editor James Crombie. “The lack of look through is something that I find it quite difficult to have conviction on,” adds Lundie, referring to private d...
Nov 16, 2023•40 min
WeWork Inc. — known for free-flowing booze and a fleeting $47 billion valuation — declared bankruptcy just two years after going public. This cautionary tale of over-indebtedness highlights the perils for investors who fall in love with businesses they don’t really understand, says Bloomberg News senior reporter Reshmi Basu. And it’s a warning for lenders to astronomically-valued start-ups as borrowers struggle with soaring debt payments, Basu tells Bloomberg senior editor James Crombie. Also in...
Nov 09, 2023•22 min
Private lending is the best opportunity in debt markets today, says Tristram Leach, co-head of European credit at Apollo Global Management. “If I had to pick a single area that I think you’re meant to lean in to — and frankly, where we’re seeing clients lean in to as well — it is private credit,” he tells Bloomberg News senior reporter Lisa Lee and senior editor James Crombie. An extra 200 bps over publicly syndicated loans is enough compensation for the relative lack of liquidity, he adds. Also...
Nov 02, 2023•30 min
Opportunities for robust returns in debt markets are the best “in quite some time,” despite rising default risk, says Rob Zable, global head of liquid credit strategies at Blackstone. In this episode of the Credit Edge, Bloomberg News senior reporter Lisa Lee and senior editor James Crombie quiz Zable on his optimistic outlook — and where he sees risk. Plus Bloomberg Intelligence analyst David Havens weighs the outlook for private credit and business development companies. BDCs are well position...
Oct 26, 2023•27 min
