The View From Apollo
Credit Investing Amid Post “Liberation Day” Uncertainty
Apr 11, 2025
Robert Bittencourt, Partner and Co-Head of Opportunistic Credit at Apollo, shares expert insights into the evolving credit markets. He discusses the significant impacts of the Trump administration's trade tariffs on market dynamics and investor confidence. Bittencourt highlights the contrasting stability of investment-grade credits versus the volatility in high-yield segments. He also explores the nuances of payment-in-kind financing, emphasizing its risks during economic uncertainty. Listeners gain valuable perspectives on navigating turbulent financial landscapes and making informed investment decisions.
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Quick takeaways
- The imposition of historic tariffs has caused significant volatility in credit markets, illustrating how quickly investor sentiment can shift amidst policy changes.
- Higher-rated credits have outperformed lower-rated ones in reaction to tariff policies, highlighting the importance of sector selection in navigating economic uncertainty.
Deep dives
Market Reaction to Tariff Announcements
The imposition of historic tariffs by the Trump administration has generated significant volatility in the financial markets, particularly affecting credit markets. Initially, the market was caught off guard by the extreme nature of the tariffs, which were expected to be around 8% to 11% but turned out to be closer to 18%. As a result, equity markets experienced a more pronounced volatility, while credit markets initially displayed a more orderly reaction with buyers looking to take advantage of lower prices. However, following further announcements and developments, a chaotic trading environment emerged, particularly on key trading days, indicating that the credit markets were also vulnerable to the rapid changes in policy and sentiment.
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