FICC Focus

“I’m an entrepreneur, I’m a capitalist. I love growth, I love to back entrepreneurs,” said Ted Koenig, founder, chairman and CEO of Monroe Capital, on how he sees the firm’s expansion to over $20 billion in assets under management from its founding in 2004. Koenig joins Bloomberg Intelligence’s Noel Hebert and Sam Geier on this episode of Credit Crunch podcast to discuss the company’s founding, attracting capital, identifying partners for growth and the market landscape. The three talk about diversification and CLOs, how big is too big and giving back to the community.

The structural dollar bearish case is holding into 2H, though fiscal considerations are what dollar bears may lean on going forward after  being driven mainly by tariff uncertainty and the impact on the de-dollarization narrative. Bloomberg Intelligence’s Chief G10FX Strategist Audrey Childe-Freeman talks to Stuart Paul, US and Canada economist at Bloomberg Economics, about the US debt dynamics and how the fiscal outlook could shape and drive the dollar view into 2H. Stuart and Audrey also touch on the narrow path to a potential dollar recovery via short-term cyclical dynamics should the US economy prove more resilient than expected. This isn’t Bloomberg Intelligence’s central working assumption, but it’s a scenario worth acknowledging.

Sue Hill, a senior portfolio manager at Federated Hermes, dives into the intricacies of T-bills amidst debt ceiling uncertainties. She emphasizes the necessity of strategizing around low default risks and unappealing yields. The discussion also covers the Federal Reserve's reverse repo facility, which may gain a permanent role in liquidity management. Hill highlights the industry's gradual shift towards central clearing, reflecting on evolving strategies in liquidity management that cater to diverse investor needs.

Commercial real estate lending remains highly sensitive to US interest rates, yet it also offers a much wider complexity premium than competing fixed income asset classes, with potential for outsized investor returns. Robin Potts, chief investment officer of Real Estate at Canyon Partners, joins BI chief fixed income strategist Damian Sassower to discuss her firm’s approach to risk management, recovery mechanisms, loan origination and product evolution. Potts and Sassower discuss financing structures, liquidity trends, operating expenses and the broader landscape for institutional capital.

Jeffrey Kivitz, Chief Investment Officer at Canyon Capital Advisors, shares insights on navigating market uncertainty and seizing investment opportunities. He emphasizes the importance of breaking traditional rules in credit investing and discusses the balance of macro and micro analyses as a CIO. Kivitz also explores complex investment landscapes, including distressed markets and the role of private credit. The conversation wraps up with light-hearted lessons from tennis, linking strategy and grace under pressure to effective problem-solving in finance.

Municipal bonds scored a win in President Donald Trump’s “big, beautiful bill” passed by the House earlier this week. They didn’t lose tax-exempt status, though the bill now moves to the Senate, where it can be changed and sent back to the House for another vote. BI analysts Eric Kazatsky and Karen Altamirano are joined by BI tax analyst Andrew Silverman and BI policy analyst Nathan Dean to discuss the legislation. The team discusses the legislation’s impact on the tax-exempt municipal market, federal spending and the bond market’s signaling of displeasure with deficits. 

Mike Medeiros, a macro strategist at Wellington Management, dives into the intricate relationship between fiscal policy and the bond market. He reveals how the bond market acts as a disciplinarian for policymakers. The discussion touches on the recent downgrade of the U.S. credit rating and its ripple effects on bond auctions. Medeiros also examines the tug-of-war between fiscal and monetary strategies, as well as the unique economic challenges facing Canada compared to the U.S. A captivating analysis of how these forces shape global yield curves unfolds!

Scott Greenberg, global chair of Gibson Dunn's Business Restructuring and Reorganization Practice Group, dives into the maze of distressed debt and lender cooperation agreements. He discusses the ongoing cat-and-mouse game between sponsors and lenders, revealing how non-disclosure and anti-cooperation tricks influence negotiations. Greenberg emphasizes the importance of timing in organizing lenders and explores the cultural differences affecting lender dynamics in Europe versus the U.S. His insights shed light on what constitutes success in liability management.

Amir Fergani, Head of Credit LDI at Generali Asset Management, brings his expertise on the easing trade war and its impact on credit markets. He discusses the effects of rising government spending in Germany and the political dynamics in France, questioning if this recovery will last. The conversation shifts to inflation trends, fueled by improved US-Europe trade relations, and potential ECB rate cuts. Fergani shares insights on investment strategies favoring fixed income over equities, emphasizing selective approaches in navigating the current credit landscape.

Dan Gropper, Managing Partner and CIO of Carronade Capital Management, shares his insights on the current state of distressed debt investing. He predicts a tough economic landscape that makes corporations hesitant to invest. The podcast delves into the alarming rise in distressed bonds, particularly in the energy sector, and provides an overview of recent bankruptcy cases like Hertz, emphasizing strategic responses to market volatility. Gropper's expert perspective highlights the intricacies of navigating today's challenging investment environment.