The Credit Edge by Bloomberg Intelligence Bloomberg

Invesco is buying real estate investment trust debt and preferred bonds from banks, betting that the US economy stays strong and interest rates eventually fall. “If you’re looking at yield, it is kind of a golden age for bonds,” says Matt Brill, the $1.6 trillion money manager’s head of North America investment-grade credit, in the latest Credit Edge podcast from Bloomberg Intelligence. “You’re getting paid to wait and at some point here, you’re going to get that kicker of the Fed starting to cut,” he tells Bloomberg News’ James Crombie and Bloomberg Intelligence Senior Credit Analyst Tolu Alamutu. Also in this episode, Brill and Alamutu discuss commercial real estate risks and opportunities as rates stay high. 
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Household debt is a good investment as the US economy remains strong, Jeremy Forster, portfolio manager at Wellington Management, says in the latest Credit Edge podcast from Bloomberg Intelligence. “We do still think that the US consumer is in really good shape,” he tells Bloomberg News’ James Crombie and Bloomberg Intelligence Senior Credit Analyst Arnold Kakuda. Forster expects “compelling” returns in fixed income for 2024, which he thinks will be the year of the bond. In addition, Wellington likes financial sector and electric utility debt. Forster and Kakuda also debate liability-driven investing and risk in the banking sector as interest rates stay high. 
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Rising private credit stress will inflict losses on investors and spur volatility, Jerry Cudzil, portfolio manager at TCW Group, says in the latest Credit Edge podcast from Bloomberg Intelligence. “Default rates are going to pick up in a really material way in private credit,” he tells Bloomberg News’ James Crombie and Bloomberg Intelligence Senior Credit Analyst David Havens. “We are currently seeing some real stress,” says Cudzil, who expects “accidents” as documentation weakens and pay-in-kind deals proliferate. Cudzil and Havens also discuss the broader financial markets implications of this turbulence, and how current leverage levels compare with 2007. TCW is underweight corporate credit but sees opportunity in collateralized loan obligations and agency mortgages.

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Western Asset Management Co. sees “compelling” opportunities in commercial real estate debt, Co-Chief Investment Officer Michael Buchanan says in the latest Credit Edge podcast from Bloomberg Intelligence. This includes loans for warehouses, distribution centers and hotels, he tells Bloomberg News’ James Crombie and Bloomberg Intelligence Senior Credit Analyst Stephen Flynn, adding that the firm is cautious on offices. In addition, Western Asset likes collateralized loan obligations and debt from companies in the communications sector. Also in this episode, Buchanan and Flynn discuss regulatory risk in mergers and acquisitions, and how investors navigate increasingly aggressive liability management transactions. 
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Altice ‘Jenga Tower’ Menaces Global Credit Markets (Podcast)Altice distress is ripping through global credit markets and setting some ugly precedents for debt investors. Aidan Cheslin from Bloomberg Intelligence joins Irene Garcia Perez, Eleanor Duncan and James Crombie with Bloomberg News to discuss the ongoing drama. Billionaire owner Patrick Drahi has taken a combative approach to creditors, who are joining forces in an effort to avoid steep losses. Credit rating downgrades and asset price falls at Altice France — which has more than €24 billion ($25.6 billion) in debt — make lenders cautious and undermine the ability of other risky companies to refinance debt. The French telecom is “teetering like a Jenga tower with unsustainable leverage and negative free cash flow,” according to BI’s Cheslin.
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Corporate debt markets are poised to perform well provided monetary policy doesn’t get tighter, according to Morgan Stanley. “As a credit investor, the thing that matters most is that the next Fed policy action is not a hike,” Vishy Tirupattur, the bank’s chief fixed income strategist, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Spencer Cutter. “The bar for a hike is very high,” he adds. Morgan Stanley still expects three rate cuts from the Federal Reserve this year, starting in July. Tirupattur favors leveraged loans, CCC rated bonds and debt from companies in the energy sector. Also in this podcast, Tirupattur discusses the private credit opportunity and commercial real estate risks. 
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