IN FOCUS6-8 min read
Schroders Credit Lens June 2026: your go-to guide to global credit markets
Corporate bond demand soaring even as spreads tight, supply high and Treasury demand weak.
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Links to all three versions of the Credit Lens are provided below and at the bottom of the page.
Summary:
- Credit spreads have tightened further. They are back at exceptionally tight levels vs history and offer little margin of safety (slides 19-21).
- Large amounts of issuance remains a theme but is easily being met by demand (slides 22-23)
- Foreign investors bought near-record amounts of US corporate bonds in March (data only available with a lag)
- Ultimately, demand remains because yields are attractive to many buyers, in isolation and vs cash
- Hyperscalers (slides 4-18)
- Embarking on enormous capex binge which continues to surprise to the upside
- Corporate bonds are an important part of the financing. They’re becoming a growing part of the index
- Issuance has been longer dated than the index so this is extending duration
- So far, credit quality is better than the index (ex-Oracle) so inclusion puts downward pressure on index spreads
- Ex-Oracle, they have an exceptional capacity to borrow. Opaque off-balance sheet financing has become a central financing source, easily doubling reported leverage.
- Even earnings disappointments, upward capex, and borrowing revisions would only pull their fundamentals down towards the median IG issuer, apart from Oracle whose position as an IG issuer is very tenuous.
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