The Credit Edge by Bloomberg Intelligence Barings Is Seeing More Credit Investor Interest in Europe Amid US Policy Mayhem
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Jun 26, 2025 In this discussion, Mike Best, a seasoned portfolio manager at Barings, reveals a growing interest in European corporate debt as investors shift focus from the US. He explains that concerns over US economic policies are driving this trend. The conversation dives into potential risks within European credit markets, the impact on various sectors like retail and communications, and strategies for navigating liability management. Best emphasizes the importance of careful investment amid global economic uncertainty, highlighting the unique opportunities in Europe's landscape.
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Market Complacency and Sector Risks
- Market complacency exists with spreads below long-term averages, yet spreads react to sector-specific risks.
- Retail and consumer product sectors underperform due to caution on leverage and changing consumer behavior.
Consumer vs. Industrial Sector Outlook
- Consumer sectors face significant concerns due to inflation and rising rates impacting affordability.
- Industrial sectors and AI infrastructure investments offer better resilience and growth potential.
Consumer Credit Challenges Ahead
- Consumer distress is uneven, with smaller companies and leveraged firms most at risk.
- Bankruptcy risk is likely to increase as refinancing challenges mount, leading to a slower market bleed.