The Credit Edge by Bloomberg Intelligence JPMorgan’s Aronov Sees More Junk Firms Struggling to Repay Debts
Jul 10, 2025
Oksana Aronov, Head of Market Strategy for Alternative Fixed Income at J.P. Morgan Asset Management, shares her insights on navigating the turbulent credit markets. She highlights the growing struggles of junk bond firms and the complacency surrounding credit risks. Aronov emphasizes the need for hedges against potential losses and warns about companies increasing debt instead of repaying it. The discussion also covers the importance of cautious investment in these uncertain times and the implications for both high-grade and high-yield debt.
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Complacency in Tight Credit Spreads
- Credit spreads are historically tight with double B-rated debt nearly matching three-month T-bills yield.
- This low compensation for risk reflects market complacency and thin new corporate debt issuance.
Inflation's Varied Corporate Impact
- Inflation impacts companies differently depending on their cash flow and global revenue exposure.
- Sectors reliant on overseas revenues and supply chains feel more pressure than others.
Beware of Bond Market Liquidity
- Understand that bond market liquidity is limited and ETFs can exacerbate price volatility.
- Prepare for sudden price drops when markets become distressed due to reduced dealer risk appetite.