Bloomberg Surveillance Bloomberg Surveillance TV: July 8th, 2025
Why Buying Corporate Credit for Income Is the Smart Move Now
Amanda Lynam of BlackRock highlights that despite macroeconomic uncertainties and policy risks, corporate credit markets show resilience. Investors often reflexively move to higher quality during volatility, but BlackRock suggests selectively lowering credit quality can be advantageous since lower-rated segments like high yield and BBs have outperformed.
The key insight is to buy corporate credit primarily for income — the carry and yield — rather than for total return gains from tightening spreads, as spreads are near all-time tights and further tightening is unlikely. Companies are actively deploying operational levers to navigate challenges, which supports credit market stability.
Lynam emphasizes that waiting for a significant sell-off in credit spreads is unrealistic and a defensive posture might miss opportunities, as the economy and companies remain more resilient than expected. This approach recognizes two-sided risks but advocates for a balanced risk exposure focusing on income generation rather than capital appreciation.
Corporate Credit Resilience
- Corporate credit markets show resilience despite macro volatility and uncertainties.
- Income and yield are the main attractions, not expecting major spread tightening soon.
Market Defies Trade War Fear
- Market participants aren't turning bearish despite trade tensions escalating.
- There is significant optimism reflected in equity upgrades and selective credit risk-taking.