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The Credit Edge by Bloomberg Intelligence
Oaktree Sees Companies in Trouble as Rates Stay High
Nov 21, 2024
David Rosenberg, head of liquid performing credit at Oaktree Capital Management, shares his expertise on credit markets and investment strategies. He predicts a boom in private credit for troubled companies due to high interest rates, highlighting rescue financing opportunities. The discussion also covers the anticipated surge in mergers and acquisitions and contrasts U.S. and European investment landscapes. Rosenberg emphasizes the need for strategic credit analysis and navigating challenges amid economic shifts and geopolitical risks.
45:09
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Quick takeaways
- High rates are driving a rise in rescue financing, presenting unique investment opportunities in distressed companies, particularly in technology and healthcare sectors.
- The credit landscape requires careful selection of high-quality credits as default rates remain low amid increasing interest rates and economic uncertainty.
Deep dives
Influence of Economic Outlook on Credit Markets
The economic outlook post-US election has significantly influenced the credit markets, creating a rally driven by optimism regarding tax cuts and deregulation. Concurrently, rising global bond yields signal concerns about potential inflation, indicating that while credit markets benefit from positive sentiment, there is an underlying risk due to higher interest rates impacting weaker borrowers. This uncertainty about the government’s future actions may affect business confidence and investment decisions, leading to a cautious yet bullish environment among credit market participants. Many believe that despite these challenges, credit spreads remain tight, suggesting ongoing investor confidence in credit quality.
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