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Odd Lots

The Next Stage of the Credit Cycle with Oaktree’s Poli

Sep 19, 2024
Danielle Poli, co-portfolio manager of Oaktree's Diversified Income Fund, shares her insights on the shifting credit landscape following recent Federal Reserve rate cuts. She discusses the surprising resilience of corporate credit despite high inflation and rising interest rates. Danielle delves into the explosive growth of the private credit market and its impact on traditional financing. With a focus on navigating market volatility, she highlights the importance of liquidity, adaptive strategies, and evolving trends in the BBB bond market.
47:37

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Podcast summary created with Snipd AI

Quick takeaways

  • The Federal Reserve's recent rate cuts signal potential opportunities in the credit cycle, prompting investors to reassess market assumptions.
  • Despite some segments facing credit quality degradation, the overall high yield market shows improved quality with a higher percentage of double B rated bonds.

Deep dives

The New Credit Cycle

An ongoing shift in the credit cycle is becoming evident, especially following the Federal Reserve's recent rate cuts. These adjustments mark a pivotal moment, suggesting potential opportunities and risks for investors. Despite expectations of increased defaults tied to rising interest rates, actual outcomes have been surprisingly stable with credit spreads remaining low. This scenario encourages a reassessment of market assumptions and investor strategies as the landscape evolves.

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