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