The Memo by Howard Marks

The Insight: Conversations – Full Return World with Howard Marks and Armen Panossian

12 snips
Nov 2, 2023
Howard Marks, Oaktree Co-Chairman, and Armen Panossian, Head of Performing Credit, explore the potential sea change reshaping investments, discussing tail risks, borrowing costs, credit analysis, surprises in the economy, and the shift to a full return world.
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INSIGHT

Fundamental Sea Change in Interest Rates

  • The sea change signals a fundamental shift away from decades of low and declining interest rates.
  • This shift alters GDP growth outlook, company financing ease, defaults, and future returns.
INSIGHT

Rising Rates Impact Is Delayed

  • The impact of higher interest rates on companies is only beginning to manifest.
  • Capital structure weaknesses will emerge more clearly over the next 12 to 24 months.
INSIGHT

Leverage and Mismatch Risks

  • Low cost of debt encourages leverage which amplifies returns but increases risk of financial distress.
  • Borrowing short-term to finance long-term investments can cause mismatches and crises.
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