Highlights

  • The economy is firmly in the expansion phase of the credit cycle, which is typically supportive of credit risk in portfolios.
  • Coupled with the economy’s position in the credit cycle, low loss expectations - driven by easy fiscal and monetary policy and healthy macro fundamentals – sets the stage for high-yield risk premiums.
  • Sustained investor appetite for yield, coupled with strong corporate profits and debt repayment, are providing a tailwind to credit spreads.
  • Potential opportunities include high-yield credits able to pass through rising input costs (should interest rates rise), along with emerging markets debt due to price dislocation from Chinese property developers.

3673075.2.1