The Credit Edge by Bloomberg Intelligence

Delve into the vibrant world of active management, where conventional wisdom meets cutting-edge strategies. Discover how active management is thriving, especially within ETFs and mutual funds. Learn about ongoing growth trends and the evolving landscape of investment opportunities. Experts share their insights on navigating this dynamic industry, shedding light on the capabilities of active managers. It’s a treasure trove of knowledge for both seasoned investors and those new to the game.

Jonny Fine, the Global Head of Investment Grade Debt at Goldman Sachs, discusses the anticipated surge in high-grade US corporate bond issuance in 2025, fueled by economic growth and refinancing needs. He elaborates on the role of private credit and its impact on traditional financing, as well as the expected dynamics from regulatory changes. Fine and his co-hosts explore how infrastructure finance and increasing M&A activity will contribute to market momentum, alongside the influence of rising interest rates on consumer behavior and capital markets.

Mohit Mittal, Chief Investment Officer at PIMCO, shares insights on the vulnerabilities in private credit, cautioning that current returns don't justify the increasing risks. He emphasizes the deteriorating fundamentals in leveraged credit markets, urging careful strategies. Alongside analyst Steve Flynn, they explore the telecom and cable sectors, discussing potential consolidation and strategies within a challenging economic landscape. Their conversation highlights the need for high-quality investments and the potential pitfalls in today's fragile market.

Michelle Russell-Dowe, co-head of private debt and credit alternatives at Schroders Capital, shares her expertise on the booming private debt market. She discusses the influx of investors diversifying away from public markets and highlights attractive opportunities in commercial and residential real estate. Russell-Dowe emphasizes the importance of recognizing emotional biases in investment decisions and the essential role of understanding market inefficiencies. The conversation also touches on emerging investors like retail and family offices entering private credit.

Rob Horn, Global Head of Infrastructure and Asset-Based Credit at Blackstone, shares insights on the booming private credit market, projected to reach $30 trillion. He highlights the advantages of hard-asset collateral in securing premium returns. Tolu Alamutu, a senior credit analyst at Bloomberg Intelligence, discusses trends in European real estate and credits. Despite geopolitical risks, he maintains a positive outlook for residential markets. The conversation also explores investment opportunities in digital infrastructure and the growing appeal of single-family rentals.

The $1.7 trillion private credit market faces several challenges after years of rapid growth, according Ana Arsov, global head of private credit at Moody’s Ratings. “It’s going to be very important to get more transparency from the banks about is there some kind of synthetic leverage, additional leverage, coming to this market,” Arsov tells Bloomberg News’ James Crombie and Bloomberg Intelligence senior credit analyst David Havens in the latest Credit Edge podcast. Arsov and Havens also debate the impact of exchange-traded funds and broader implications of private debt stress. “It just doesn’t seem like the risk-transmission mechanism is nearly as potent in the way that private credit is structured today, as it has been in maybe some other areas that have caused systemic problems in the past,” says Havens.See omnystudio.com/listener for privacy information.

Matt Mish, head of credit strategy at UBS, joins Bloomberg's James Crombie and senior analyst Julie Hung to dissect the impact of the US election on credit markets. Mish predicts that a Kamala Harris victory would favor bonds in basic industries and utilities due to support for existing stimulus policies. On the flip side, he warns that a Democratic win could hinder tech and telecom debt. They also discuss the outlook for US consumers, the stress in private credit markets, and the potential positives for energy and defense under a Trump presidency.

Lindsay Rosner, head of multi-sector investing at Goldman Sachs Asset Management, joins Bloomberg News reporter James Crombie and credit analyst Jody Lurie to delve into the complexities of commercial real estate debt. They discuss how Goldman is capitalizing on opportunities in commercial mortgage-backed securities amid market challenges. The trio also weighs the outlook for retail and leisure sectors, particularly considering the pressures on lower-income consumers. Insightful perspectives on risk management and credit analysis strategies are shared.

Jimmy Levin, chief investment officer at Sculptor Capital Management, joins Bloomberg contributors James Crombie and Irene Garcia Perez, along with credit analyst Stephane Kovatchev. They discuss striking opportunities in funding companies with unsustainable debt loads, viewing it as the best chance in corporate credit recently. Levin highlights expected growth in asset-based finance and potential double-digit returns. The panel also evaluates the resilience of U.S. consumers and the outlook for debt in cyclical industries amid fluctuating interest rates.

Norinchukin Bank faces significant losses from the sale of US and European sovereign bonds that tumbled as interest rates rose, and other financial institutions may also be exposed. “The bank is still losing more than a billion dollars a quarter,” says Bloomberg Intelligence senior credit analyst Pri de Silva, referring to the Japanese agricultural bank also known as Nochu. “They need to rip that band aid off and address negative carry in the securities portfolio,” de Silva tells Bloomberg News’ James Crombie in the latest Credit Edge podcast. De Silva also weighs the outlook for Asia’s Additional Tier 1 bond market, where risk premia are shrinking as supply evaporates. Also in this episode, Mary Ellen Olson, senior credit analyst at Bloomberg Intelligence, discusses the turnaround at India’s Vedanta, which may tap the US dollar bond market, as well as the impact of China’s economic slowdown on Asian miners. See omnystudio.com/listener for privacy information.