The Credit Edge by Bloomberg Intelligence

Lisa Coleman, head of global investment-grade corporate credit at JPMorgan Asset Management, shares her insights on rising credit risks amid escalating trade wars. Managing $73 billion in assets, she highlights the deteriorating technicals in credit markets and emphasizes the need for higher returns due to uncertainty. Interesting discussions include the shifting landscape for U.S. companies, investment opportunities in healthcare and consumer sectors, and the evolving sentiment around different asset classes as recession fears loom.

Winnie Cisar, the global head of strategy at CreditSights, dives into the shifting landscape of corporate credit investments as global portfolio managers look beyond the US for opportunities amid rising volatility. She discusses the implications of trade wars and stagflation on US borrowers while highlighting potential investments in sectors like industrials and Boeing bonds. With US exceptionalism waning, Cisar emphasizes the increasing allure of markets in China and Europe as investors adapt to new economic dynamics.

Amid heightened volatility in American capital markets, there are more attractive private debt options elsewhere, according to alternative investment manager BC Partners. “In 25 years of doing this, it’s probably the first time we’re seeing actually decent relative value in Europe,” said Ted Goldthorpe, the firm’s head of credit. “The US has always provided better relative value in every environment — that’s kind of changed,” Goldthorpe tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Arnold Kakuda in the latest Credit Edge podcast. Besides specific European opportunities, Goldthorpe and Kakuda also discuss sports lending, the impact of tariffs on US mid-market borrowers, private loan valuations and the pipeline for acquisitions.See omnystudio.com/listener for privacy information.

Matthew Bass, Head of Private Alternatives at AllianceBernstein, discusses the competitive edge of private debt in today's market. He highlights how private credit remains attractive despite a surge in demand and recent interest rate changes. Bass shares insights on the continued premium private debt holds over publicly traded options and the resilience of commercial real estate. The conversation also touches on emerging opportunities in asset-based finance and the impact of exchange-traded funds on private debt dynamics.

Lauren Basmadjian is the Global Head of Liquid Credit at Carlyle, overseeing a vast $192 billion credit platform. In this conversation, she reveals that middle-market CLOs are offering impressive mid-to-high teens IRRs, overshadowing traditional syndicated loans. Basmadjian discusses the risks from liability management exercises, the convergence of private and public debt, and opportunities in the European leveraged loan market. She also emphasizes the rising demand for quality loans and the impact of interest rates on borrower behavior, shedding light on evolving market dynamics.

Sonali Pier, a portfolio manager at PIMCO, shares insights from her role at the $2 trillion asset manager. She highlights the attractive debt opportunities in U.S. banks and leisure sectors, particularly cruise lines, amidst current economic turbulence. Caution surrounds retail and auto industries, especially in Europe. The discussion also touches on strategies for navigating creditor conflicts during borrower distress, valuing private debt, and exploring asset-based finance opportunities, all while emphasizing the importance of credit quality in uncertain markets.

Lotfi Karoui, Chief Credit Strategist at Goldman Sachs, shares his expertise on navigating the current credit market landscape. He emphasizes the unique opportunity for credit investors to hedge against losses due to low costs. Despite expensive valuations, he remains optimistic about corporate debt, citing strong demand paired with limited supply. The discussion also highlights remarkable value in mortgage-backed securities and potential opportunities in the European bond market, addressing risks linked to defaults and M&A activity.

Chris Wright, President of Crescent Capital Group, shares his expertise on credit markets and economic trends. He discusses the resilience of corporate debt amidst volatility from trade wars and the new US administration's pro-growth policies. Wright emphasizes low default rates and consumer confidence while addressing inflation and tariff negotiations as strategic moves. The conversation also highlights the rise of private credit in the middle market and its importance as a player in capital formation amid an evolving economic landscape.

Robert Koenigsberger, founder and chief investment officer of Gramercy Funds Management, shares insights on the exciting trajectory of private credit in emerging markets. He discusses significant opportunities arising from high rates and decreased bank lending, emphasizing that we're only beginning to explore this market. The conversation includes the nuances of credit risks, strategic partnerships, and the evolving landscape of real estate investments in regions like Mexico and Turkey, while addressing the challenges posed by volatile economies and geopolitical factors.

Symon Drake-Brockman, co-founder and managing partner of Pemberton, dives into the dynamic world of European private credit. He discusses how to stay competitive with a diverse product range, including net asset value financing and CLOs. Drake-Brockman shares insights on the relative strengths of US versus European private credit markets while exploring strategic partnerships and risk management. He also reflects on the lessons learned from financial crises and the importance of innovation in today’s credit landscape.