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Credit Market Outlook - Sep 2020

The Fixed Income Market Outlook for September 2020

A short while ago, we wrote about inflation targeting and the Fed's recent policy shift. After a few days though, we couldn't help but wonder — how have fixed income markets reacted since this announcement, and what does the broader outlook look like for credit markets?

From multi-sector credit outlooks to deep dives into securitized markets and asset-based finance, this set of papers has all of the credit-related bases covered.

credit market outlook

Credit: Rising debt, weak growth highlight active selection (MFS IM, Sep 2020)

Due to the rising amount of corporate debt, and other factors, security selection is extremely important in credit markets. Corporate default risk and the risk of investing in zombie companies both highlight the importance of an active approach to credit investing.

Spotlight on Private Credit Markets (M&G Investments, Sep 2020)

For compliance reasons, this paper is only accessible in certain geographies

M&G Investments reports an uptick in transactions within private markets, and that the outlook for private assets remains positive, as private credit markets begin to reopen. Specifically, they describe opportunities within the CLO, RMBS, and trade receivables markets.

Video: Securitised credit during COVID-19 (PGIM Fixed Income, Aug 2020)

This PGIM Fixed Income podcast describes why at present, in securitized products, it is important to own debt at the top of the capital structure. Additionally, it goes into current market risks and specific investment ideas within the securitized products market.

Corporate Credit: Flexibility matters in the search for yield (Nuveen, Aug 2020)

Investors who are flexible enough to look at fallen angels may uncover opportunistic mispricings in this 'crossover market'. Forced selling of fallen angels creates some of these opportunities. Nuveen describes these circumstances and several others.

Risks Persist in Fixed Income Markets (PineBridge Investments, Sep 2020)

PineBridge's fixed income outlook presents fundamental characteristics, relative valuations, and technicals for leveraged finance markets, IG credit, EM sovereigns and corporates, and securitized products. It also contains a brief macro outlook and highlights risks on the near-term horizon.

Investment-Grade Credit: Not out of the woods yet (LGIM, Aug 2020)

For compliance reasons, this paper is NOT accessible in the United States and Canada

Though almost certainly less volatile than the first half of this year, H2 2020 may still present specific challenges for credit investors.

ABS in a Covid Economy (Federated Investors, Aug 2020)

Randy Bauer of Federated Hermes examines how the three largest consumer-based asset-backed securities (ABS) sectors are faring (credit cards, auto loans, and student loans).

US Corporate Debt: Opportunity and risk (Capital Group, Aug 2020)

For compliance reasons, this paper is only accessible in certain geographies

Stimulus from central banks may have reduced the likelihood that bonds with strong credit ratings will be that affected by future volatility, but BBB issuers may still be at risk of both downgrades and market stress.

Why We See Value in Loans Today (Eaton Vance blog, Sep 2020)

For compliance reasons, this paper is NOT accessible in the United States and Canada

Eaton Vance proclaims that there may still be value in the floating-rate loan market, despite the run-up in price since April of this year.

Debt Monetization: Constraints and global implications (Manulife IM, Sep 2020)

For compliance reasons, this paper is only accessible in certain geographies

Will debt monetization help to boost both aggregate demand and inflation? Manulife Investment Management looks at MMT, as well as the constraints that governments should abide by in order for it to be executed well.

Podcast: A momentous year for credit issuance (NN IP, Aug 2020)

Portfolio managers from NN Investment Partners discuss the outlook for H2 2020, and the unprecedented amount of new issuance so far this year.

Credit Outlook: Fed policy shift and corporate credit (Moody's, Aug 2020)

Moody's discusses the Fed's policy shift towards average inflation targeting, and how this is set to impact the outlook for fixed income markets.

Sovereign Borrowing Outlook for OECD Countries: COVID-19 edition (OECD, 2020)

The borrowing needs and debt management policies of OECD countries are surveyed in the course of this report. The report has been edited to include data through May 2020, given the impact of COVID-19.