The Credit Edge by Bloomberg Intelligence Credit Pays ‘Equity-Like Returns,’ Says Napier Park
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Mar 7, 2024 
Credit derivatives and securitizations offer equity-like returns even in a recession, says Napier Park. Structured credit offers better gains than corporate bonds with reduced risk. Concerns raised about private credit pricing disparities. Real estate companies borrowing from public bond markets due to high rates. Listen for more insights on Apple Podcasts and Spotify.
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Rate Cut Predictions
- Napier Park's investment view was that the market's predicted rate cuts were excessive.
- They believed the economy wasn't weak enough to justify such drastic cuts.
Investment Strategy
- Napier Park seeks asset classes with significant risk premiums compared to potential default risks during a recession.
- This is mainly found in structured credit markets, unlike high-yield markets with currently low spreads.
Structured Credit vs. Traditional Credit
- Structured credit offers equity-like returns, unlike high-yield or investment-grade options.
- This makes it suitable for yield-seeking portfolios as an equity or risk asset alternative.