The Credit Edge by Bloomberg Intelligence KKR Is Hunting for Yield in European and Japanese Credit Markets
Dec 11, 2025
Tal Reback, a global investment strategist at KKR, discusses the firm's pursuit of yield in the European and Japanese credit markets. With US debt spreads tightening, she emphasizes the importance of geographic diversification and highlights a potential $1 trillion opportunity in European asset-backed securities. Reback details the allure of private credit, risk management strategies, and market complexities. She also shares insights on AI's impact on credit underwriting and the need for selective, quality positioning in today’s exuberant market.
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Supply Shortage Keeps Spreads Tight
- The credit market faces a supply-demand imbalance that keeps spreads tight despite higher issuance this year.
- KKR expects more M&A is needed to generate net new supply and allow spreads to normalize.
Prioritize Structure Over Small Yield Gains
- Be patient and disciplined when allocating to private markets to find true excess spread opportunities.
- Focus on structure and downside protection rather than obsessing over a few basis points of yield.
Private And Public Markets Coexist
- Private investment-grade and asset-backed markets are growing areas of opportunity inside the $45 trillion TAM.
- Public and private channels will coexist and offer complementary funding solutions for corporates.