FICC Focus Credit Crunch: Views from Above - How to Think Credit at Tights?
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Nov 28, 2025 In this insightful discussion, Ashwin Palta, Global High Yield Portfolio Manager at BNY, and Iain Stealey, International CIO at J.P. Morgan, explore the intricate world of credit amidst tightening conditions. They debate strategy shifts towards high-quality high yield versus investment grade bonds. Iain highlights the dovish Fed outlook and the implications for fixed income, while Ashwin discusses low default expectations and potential M&A activities. The duo also analyzes risks from inflation and shifting market dynamics, offering valuable insights for navigating 2026.
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Consider Upgrading Into Quality And Hybrids
- Do consider moving up in quality because yields still compensate for risk in many IG names.
- Ashwin Palta recommends allocating to hybrids (AT1s/RT1s) when comfortable with balance sheets and pickup is adequate.
Rate Risk Dominates Investment Grade Returns
- Investment grade returns are increasingly driven by rate moves rather than spread pickup.
- Mahesh Pingaligam prefers high yield at the asset-class level because IG now offers low spread contribution to total yield.
Fiscal Support And Easier Policy Favor Corporates
- Fiscal stimulus and easing bias are tailwinds for corporate credit fundamentals.
- Iain Stealey argues high-quality corporate credit remains compelling versus government bonds as rates fall.