Odd Lots Oaktree's Wayne Dahl on Credit Markets Right Now
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Sep 18, 2023 
Wayne Dahl, the managing director and investment risk officer at Oaktree Capital Management, shares valuable insights into the current credit market landscape. He discusses the unexpected resilience of the economy despite Federal Reserve rate hikes and tight credit spreads. The conversation navigates risks in leveraged loans and refinancing trends influenced by the pandemic. Dahl also reflects on the implications of recent Fed actions and the interaction between housing and corporate markets while addressing investment strategies moving forward.
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Inflation and Interest Rates
- The Federal Reserve combatted inflation by raising interest rates, following historical precedent.
- This was a necessary response to increased demand and diminished supply, exacerbated by COVID-19.
Oaktree's Risk Philosophy
- At Oaktree, risk management prioritizes loss avoidance over volatility.
- Their philosophy emphasizes that by avoiding losses, investment winners will naturally emerge.
Credit Market Dynamics
- The shift from a low-return to a high-return environment has changed the credit market dynamic.
- Attractive yields, discounted fixed income prices, and median spreads combine for good investments.