PGIM Lauds ‘Bulletproof’ CLOs as Credit Risks Rise
Collateralized loan obligations are a credit safe haven as highly-indebted companies get dragged down by economic slowdown, according to PGIM Fixed Income. “These structures are bulletproof,” Greg Peters, the $860 billion asset manager’s co-chief investment officer, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Matthew Geudtner in the latest Credit Edge podcast. “The loan market could really come upon hard times and these structures will be fine,” says Peters, referring to higher-rated CLO tranches. Peters and Geudtner also discuss how to profit from liability management exercises, private debt relative value and growing default risk in the consumer and hospitality sectors.See omnystudio.com/listener for privacy information.
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45:16
Credit Market Calm Is at Odds With High Default Risk, Schwab’s Martin Says
Credit markets are rallying but there’s elevated risk of some companies not repaying debt, according to the Schwab Center for Financial Research. “There’s a sense of complacency,” Collin Martin, the firm’s fixed income strategist, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Himanshu Bakshi in the latest episode of the Credit Edge podcast. “Defaults are probably going to stay high,” says Martin, noting low interest coverage ratios among the weakest borrowers. Martin and Bakshi also discuss private credit risk, floating-rate and preferred debt opportunities, and the impact of trade wars on consumer confidence.See omnystudio.com/listener for privacy information.
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46:00
Dimensional Says High-Yield Public Debt Has the Edge Over Private
Private credit may be hot, but it isn’t for all investors and doesn’t do better than traded junk debt, according to Dimensional Fund Advisors, which manages $790 billion in assets. “There is no outperformance relative to high-yield public bonds,” Savina Rizova, the firm’s co-chief investment officer and global head of research, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Jean-Yves Coupin in the latest episode of the Credit Edge podcast. “Some people might get disappointed with some of the attributes of private credit,” says Rizova, highlighting better liquidity and transparency in public markets. Rizova and Coupin also discuss Dimensional’s expansion into mortgage-backed securities, its active exchange-traded fund strategy and the firm’s overall credit exposure and positioning.See omnystudio.com/listener for privacy information.
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44:18
Polus Adds Credit Shorts, Sees Default Mountain Ahead
Tariffs are inflicting economic damage that will force more companies to default on their debt, according to Polus Capital Management. “We do have a more substantial book of single name, high-yield credit shorts,” Robert Dafforn, the firm’s chief investment officer for opportunistic credit, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Tim Riminton in the latest episode of the Credit Edge podcast. “We think about it as the foothills before the mountain as you go on the slow ascent, and then it kind of picks up more broadly after that,” says Dafforn, referring to an increase in delinquency amid high interest rates and slowing growth. The CIO of Polus also discusses trouble brewing in the chemicals, building materials, packaging and consumer sectors, as well as “equity-like returns” for distressed-debt investors.See omnystudio.com/listener for privacy information.
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48:15
Barclays’ DCM Chief Sees Buyers Longing for Long Bonds
Yield-hungry credit investors are increasingly seeking longer-dated corporate debt, just as supply is evaporating, according to Barclays. “It’s problematic,” Meghan Graper, the firm’s global head of debt capital markets, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Arnold Kakuda in the latest Credit Edge podcast. “I worry — can we source enough assets to appeal to where the bid is gravitating, and that’s out the curve.” Graper and Kakuda also discuss the growth of private credit, value in financial sector debt, hybrid issuance, the Trump put and league table rankings for global bond underwriters.See omnystudio.com/listener for privacy information.
The Credit Edge reviews the top credit news of the week and looks at the week ahead, with in-depth research of the most important corporate sectors, trends and themes. Analysis of specific corporate bonds and credit default swaps is backed by Bloomberg Intelligence's robust data sets and indexes.
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