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Schroders Credit Lens January 2023: your go-to guide to global credit markets

Our monthly analysis highlights the charts and data that matter to investors in corporate credit.



Kristjan Mee
Strategist, Strategic Research Group

The January edition of the Schroders Credit Lens highlights historically large negative total returns in 2022, recent stability in credit spreads, and the sharp increase in issuance in early 2023.

Links to all three versions of the Credit Lens are provided below and at the bottom of the page.

Credit Lens (EUR)

Credit Lens (GBP)

• Credit Lens (USD)


The combination of rising risk-free yields and wider spreads resulted in the worst year in IG credit since at least the 1970s. History suggests a better outlook for 2023

Credit spreads have been more stable recently. Signs of cooling inflation have reduced interest rate volatility, while uncertainty on the economic outlook has prevented spreads from falling further

Default rates in high yield (HY) have started to rise. Rising distress ratios indicate that defaults could start to increase in 2023

Issuance was slightly lower in IG compared to 2021 but fell drastically in HY. Very limited maturities in the near term reduce the need for issuance

Q3 corporate fundamentals data indicate that leverage has remained stable, aided by very low debt growth. Interest coverage, on the other hand, has started to move lower on rising interest costs

Looking ahead, unless earnings fall meaningfully, leverage is unlikely to increase sharply. Still, rising interest costs and pressure on margins from higher costs are likely to continue to erode fundamentals

Background on the Schroders Credit Lens:

The Schroders Credit Lens is a comprehensive monthly overview of the global credit market.

It is packed full of data and insights on dollar, euro and sterling investment grade and high yield bonds, and on hard currency, local currency and corporate emerging market debt.

Importantly, as well as assessing each area individually, the Schroders Credit Lens also shows how they compare with each other, in terms of relative attractiveness. This is likely to be of particular interest to those involved in making, or advising on, asset allocation decisions.

The corporate credit section (investment grade and high yield bonds) includes a deep dive into valuations, fundamentals and technicals.

Many investors hedge currency risk when investing in overseas bond markets and hedged yield levels vary significantly depending on your domestic currency. As a result, we have produced three versions of the pack, one each from the perspective of a sterling, dollar and euro based investor.

We hope you find this publication useful and welcome all feedback.

You can download all three versions of the Credit Lens below:


Kristjan Mee
Strategist, Strategic Research Group


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