The Credit Edge by Bloomberg Intelligence

Meghan Robson from BNP Paribas discusses the growing threat of weak companies unable to pay debts due to high interest rates. BNP recommends shorting some low-rated issuers and expresses caution on the financial sector. Robson also highlights the impact of the US presidential election on credit markets.

Europe’s largest asset manager, Amundi, expects Additional Tier 1 bank bonds to extend gains in what it sees as a broadly positive market for corporate debt. “We’re obviously in this kind of Goldilocks scenario, I think, where the central bank put remains on the table,” Steven Fawn, head of global credit at Amundi Asset Management, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Stephane Kovatchev. “Sub-debt is one part of the market which we like,” Fawn says in the latest Credit Edge podcast, referring to subordinated bonds, including bank AT1s. In addition, the portfolio manager discusses Amundi’s macroeconomic outlook, fund flows and positioning by industry sector and ratings tier. Also in this episode, BI’s Kovatchev analyzes the impact of the Baltimore bridge collapse on the global supply chain.See omnystudio.com/listener for privacy information.

Guest Gunther Stein from Sound Point Capital Management discusses how Altice's debt issues are impacting the CLO market in Europe. He also talks about the opportunities in technology, cable, and healthcare sectors in the leveraged loan space. Stein expects higher rates to boost leveraged loans and addresses concerns around CLO issuance, pricing, and loan liquidity.

Credit investors are getting low compensation, investment grade debt is promising, Loomis likes BBB rated debt, concerns about commercial real estate risk, improving credit prospects at Paramount Global, US election boost for iHeartMedia.

Asset-based lending is predicted to boom over the next decade, with Marathon Asset Management CEO Bruce Richards highlighting lucrative opportunities in office loans and distressed commercial real estate. The discussion also covers the shift towards asset-based lending in the private credit market and the potential for trillion-dollar opportunities in commercial real estate loans.

Credit derivatives and securitizations offer equity-like returns even in a recession, says Napier Park. Structured credit offers better gains than corporate bonds with reduced risk. Concerns raised about private credit pricing disparities. Real estate companies borrowing from public bond markets due to high rates. Listen for more insights on Apple Podcasts and Spotify.

Carlyle Group's Mark Jenkins discusses the surge in opportunities from banks shedding loans, noting credit cards, student loans, and housing loans being repackaged as securities. He talks about high returns in private credit, risks in direct loans, and the use of AI for investment decisions. Jenkins emphasizes the infrastructure of AI over direct AI investments for now.

Fortress Investment Group predicts a trillion-dollar opportunity in distressed real estate debt, foreseeing sector restructuring and long-lasting impacts on banks. Bloomberg Intelligence analyzes real estate stress in Europe, highlighting concerns in Germany, Sweden, and Austria. The podcast explores challenges in commercial real estate, diverse investment strategies for optimal returns, contrarian views on the market, and navigating the real estate debt crisis.

US-style creditor-on-creditor violence spreading to Europe is a worry for loan investors, according to Camille McLeod-Salmon, portfolio manager at Fidelity International. “What we are focused on is this move that’s in the US towards creditor-on-creditor violence — and the shift that you’ve had there — and that translating into Europe,” she said. London-based McLeod-Salmon talks to Bloomberg News’ Lisa Lee and James Crombie and Bloomberg Intelligence’s Aidan Cheslin in the latest Credit Edge podcast. There are opportunities for investors in the technology and chemical sectors, she adds, predicting high-single-digit returns in European leveraged loans. Also in this episode, BI’s Cheslin weighs the outlook for Altice, which is shedding assets in a bid to reduce debt. The company has had to pay up to extend maturities and there’s a risk of divesting crown jewels in pursuit of fresh cash, Cheslin says. See omnystudio.com/listener for privacy information.

Geopolitics are a potential menace to public debt markets that could present opportunities for private lenders, according to Mike Dennis, co-head of European credit at Ares Management. “The capital markets in general are still pretty fragile,” Dennis tells Bloomberg News’ Lisa Lee and James Crombie in the latest Credit Edge podcast. “It wouldn’t take much for that liquidity to reverse out of the system,” he said. Volatility may open the door for private credit firms to participate more in larger corporate loan deals, Dennis says, adding that there’s more demand for European transactions than supply. Also in this episode, Bloomberg Intelligence’s Stephane Kovatchev analyzes the shipping sector after a 300% increase in freight rates. Greater supply of ships coupled with fading demand are expected to relieve some of the price pressure, Kovatchev says.See omnystudio.com/listener for privacy information.