The Credit Edge by Bloomberg Intelligence

Aaron Fink, Head of Asset Finance at Centerbridge, shares his insights on the impact of persistent inflation on consumers and credit markets. He highlights the potential risks associated with rising prices and interest rates, emphasizing how these factors could weaken the labor market. Despite these challenges, Fink sees promising opportunities in consumer finance, particularly in asset-based loans. The discussion also touches on the future of private credit and the role of AI-driven investment strategies in commercial real estate.

Jim Fellows, Co-president and CIO of First Eagle Alternative Credit, shares his insights on the current credit landscape. He highlights the tightening debt spreads and urges a conservative approach in leveraged loans and high-yield bonds. The conversation digs into opportunities in asset-based lending and trends in middle-market loan pricing. Fellows also discusses the outlook for buyout finance and the challenges posed by private credit defaults, revealing the complexities and risks in today's investment climate.

Andrzej Skiba, Head of US Fixed Income at RBC Global Asset Management, dives into the potential challenges facing the private credit market as interest rates remain high. He emphasizes the advantages of public markets, citing better leverage profiles. Skiba, alongside analysts James Crombie and Mike Holland, explores upcoming trends in financial-sector debt, enticing opportunities in technology and media bonds, and strategies to navigate market volatility. They also touch on the implications of excessive leverage and the shifting landscape of high-yield securities.

Akila Grewal, Global Head of Credit Product at Apollo Global Management, dives into the explosive growth of the private credit market, predicted to soar to $40 trillion in five years. She discusses the dynamics of corporate financing and the advantages of private lending over public solutions. Grewal also examines investment opportunities in U.S. commercial real estate, notably data centers, while highlighting the importance of high investment standards amid geopolitical risks. Listeners gain insights into the evolving landscape of private credit and its potential impact on global markets.

Joining the discussion are Oleg Melentyev, head of high-yield credit strategy at Bank of America, and Matt Mish, head of credit strategy at UBS. They delve into credit spreads nearing record lows and the implications of rising debt issuance. Key topics include the impact of tariffs on credit markets and navigating risks amidst economic uncertainties. They also explore the evolving loan landscape and the critical role of liability management in preventing defaults. Bourbon culture uniquely ties into investment strategies, adding flavor to the financial discourse.

In this discussion, Jeremy Burton, a Portfolio Manager at PineBridge Investments, shares insights on the current credit market landscape. He highlights the troubling imbalance between soaring demand and limited supply of corporate bonds, raising concerns about subpar credit decisions. They delve into rising interest rates, consumer default rates, and risks in specific sectors like media and healthcare. Burton also emphasizes the need for prudent risk management as the market navigates these economic uncertainties. It's a compelling look at the complexities shaping today's credit environment.

Gabriela Santos, Chief Market Strategist for the Americas at J.P. Morgan Asset Management, shares her insights on today's investment landscape. She argues that real estate and private equity are more promising than private credit. Santos highlights signs of recovery in commercial real estate and discusses the implications of bond spreads, CCC bond risks, and the effects of trade wars. The conversation also covers strategies for navigating credit risks and the impact of the strong U.S. dollar on international opportunities.

TJ Durkin, Head of Structured Credit and Specialty Finance at TPG Angelo Gordon, discusses the booming opportunities in home equity borrowing as homeowners capitalize on rising real estate prices. He predicts a staggering $150 to $200 billion in annual origination, highlighting the shift towards asset-based finance. The conversation touches on the evolution of structured finance, the challenges facing private debt, and emerging trends in commercial real estate and residential solar energy. Durkin emphasizes new strategies and regulatory impacts shaping the future of lending.

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.

Sustainable finance can keep growing despite potential headwinds from the next US administration, according to Nikko Asset Management. “If the political side is not asking for disclosure on strategies and updates on ESG, we as portfolio managers have to ask,” said Holger Mertens, Nikko’s head of global credit, referring to environmental, social and governance standards. “It’s our job to make sure we’re buying assets at the right price,” Mertens tells Bloomberg News’ James Crombie and Bloomberg Intelligence senior credit analyst Tolu Alamutu in the latest Credit Edge podcast. Mertens and Alamutu also discuss ESG debt returns, energy transition, issuance forecasts and real estate risks such as stranded assets.See omnystudio.com/listener for privacy information.