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. 

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.

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.

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.

The Credit Edge by Bloomberg Intelligence

Credit’s in Trouble If Fed Hikes, Says Morgan Stanley

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SpaceX bondholders are bolstered by a fat equity cushion, high-grade ratings and a relatively small amount of debt outstanding — but they depend on founder Elon Musk, according to Bloomberg Intelligence. “There’s a huge risk there, and the rating agencies have actually pointed this out in terms of governance,” Robert Schiffman, BI senior technology credit analyst, tells Bloomberg News’ James Crombie in this special episode of the Credit Edge podcast. “You’re absolutely on an Elon Musk trip — his vision and his ability to raise money is a large portion of this company right now,” adds George Ferguson, BI senior equity analyst for aerospace, defense and airlines. The trio also discuss poor secondary performance in SpaceX bonds, relative value compared with the equity, and credit-market risks if AI flops.

SpaceX bondholders are bolstered by a fat equity cushion, high-grade ratings and a relatively small amount of debt outstanding &mdash; but they depend on founder Elon Musk, according to Bloomberg Intelligence. &ldquo;There&rsquo;s a huge risk there, and the rating agencies have actually pointed this out in terms of governance,&rdquo; Robert Schiffman, BI senior technology credit analyst, tells Bloomberg News&rsquo; James Crombie in this special episode of the Credit Edge podcast. &ldquo;You&rsquo;re absolutely on an Elon Musk trip &mdash; his vision and his ability to raise money is a large portion of this company right now,&rdquo; adds George Ferguson, BI senior equity analyst for aerospace, defense and airlines. The trio also discuss poor secondary performance in SpaceX bonds, relative value compared with the equity, and credit-market risks if AI flops.

SpaceX Bondholders Face Huge Key Person Risk on Their Elon Musk Trip

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Further acceleration in AI debt issuance has the potential to steer demand away from government bonds, according to Amundi, Europe’s largest asset manager. “At some point it could have a crowding effect, but we are not there yet,” Gregoire Pesques, the firm’s chief investment officer for global fixed income, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Tolu Alamutu in the latest Credit Edge podcast. “It’s a risk that we monitor,” says Pesques, whose company has $2.7 trillion under management. They also discuss value in corporate debt relative to government bonds, how G7 countries are behaving more like emerging markets and Amundi’s concerns about central bank independence.

 

Further acceleration in AI debt issuance has the potential to steer demand away from government bonds, according to Amundi, Europe&rsquo;s largest asset manager. &ldquo;At some point it could have a crowding effect, but we are not there yet,&rdquo; Gregoire Pesques, the firm&rsquo;s chief investment officer for global fixed income, tells Bloomberg News&rsquo; James Crombie and Bloomberg Intelligence&rsquo;s Tolu Alamutu in the latest Credit Edge podcast. &ldquo;It&rsquo;s a risk that we monitor,&rdquo; says Pesques, whose company has $2.7 trillion under management. They also discuss value in corporate debt relative to government bonds, how G7 countries are behaving more like emerging markets and Amundi&rsquo;s concerns about central bank independence.
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Europe's Largest Asset Manager Warns of AI Debt Deluge Crowding Out

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Private credit disarray spells opportunity for housing giant Pretium, which targets high returns by lending to US homebuilders. “Our private credit looks a little bit different than other private credit in the sense that we are secured, we have real good downside protection,” Jon Pruzan, the company’s co-president, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Erica Adelberg in this episode of the Credit Edge podcast. “We have a lot of people who want capital and not a lot of people providing capital — that puts us in an opportunity to continue to generate attractive returns,” says Pruzan, who was previously chief financial officer at Morgan Stanley. They also discuss housing fundamentals, opportunity by region, how Pretium achieves midteens returns and political risks going into the November US midterm elections.

Private credit disarray spells opportunity for housing giant Pretium, which targets high returns by lending to US homebuilders. &ldquo;Our private credit looks a little bit different than other private credit in the sense that we are secured, we have real good downside protection,&rdquo; Jon Pruzan, the company&rsquo;s co-president, tells Bloomberg News&rsquo; James Crombie and Bloomberg Intelligence&rsquo;s Erica Adelberg in this episode of the Credit Edge podcast. &ldquo;We have a lot of people who want capital and not a lot of people providing capital &mdash; that puts us in an opportunity to continue to generate attractive returns,&rdquo; says Pruzan, who was previously chief financial officer at Morgan Stanley. They also discuss housing fundamentals, opportunity by region, how Pretium achieves midteens returns and political risks going into the November US midterm elections.

Real Estate Is Next Bet for Debt Investors Avoiding Private Credit

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Credit’s in Trouble If Fed Hikes, Says Morgan Stanley

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