Evolving opportunities in corporate credit
Corporates are moving out of the post Global Financial Crisis (GFC) deleveraging phase. Leverage is rising, corporate health has peaked and credit risk premia have retraced to around fair value. At this phase of the cycle investors may be tempted to book profits and head for the exit. We would argue against this. We believe they continue to play an important role in client portfolios in delivering yield and providing portfolio diversification, particularly in a time of equity market volatility and uncertainty. We do however believe the next phase of the credit cycle will be more challenging requiring active management of the type and amount of credit exposures held in an environment where risks are on the rise.
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