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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Episode guests

Danielle Poli

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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.

Unpacking the Triple B Bubble and Creditor Dynamics

04:10

Evolving Dynamics of the Credit Cycle

02:58

Navigating Volatility: Strategies and Opportunities in Credit Markets

04:02

Avoid Losses to Succeed

01:10

Intro

2min

Navigating the Credit Market Landscape

13min

Navigating Market Volatility: Strategies for Investment and Liquidity

4min

The Rise of Private Credit

11min

Shifting Dynamics in the Credit Market Post-COVID

4min

Navigating the BBB Bond Market

13min

Exploring the Nuances of Creditor-on-Creditor Violence

3min

This week, the Fed cut benchmark rates by 50 basis points. Lower financing costs should be a relief for companies that need to borrow in the form of bonds or loans. But, the weird thing about the previous few years of high rates and high inflation is how much corporate credit has defied expectations. While defaults increased slightly, there wasn’t a huge wave of bankruptcies. And most companies haven’t really had trouble finding financing, with a smorgasbord of options available to them — including from the booming private credit market. So what happens now that the Fed is lowering rates? In this episode, we speak with Danielle Poli, co-portfolio manager of Oaktree’s Diversified Income Fund and a founding member of the firm’s investment committee, about how she sees the next leg of the credit cycle unfolding, and how she decides between a multitude of potential investments in the space.

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Odd Lots

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

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

The New Credit Cycle

Expanding Credit Options for Businesses

Navigating Investment Quality in a High Yield Environment

The Influence of Macroeconomic Policies

Unpacking the Triple B Bubble and Creditor Dynamics

Evolving Dynamics of the Credit Cycle

Navigating Volatility: Strategies and Opportunities in Credit Markets

Avoid Losses to Succeed

Remember Everything You Learn from Podcasts