Schroders Credit Lens May 2026: your go-to guide to global credit markets
Spreads are once again back at exceptionally tight levels.
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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 retraced most/all of their earlier widening. They are back at exceptionally tight levels vs history and offer little margin of safety (slides 4-6).
Fundamentals remain supportive but some early signs of stress are emerging (slides 7-9)
US high yield (HY) default rates are rising, albeit from a low level
Fallen angels (downgrades from investment grade (IG) to HY) have started outpacing rising stars (upgrades from HY to IG) recent months
As commodity net importers, European and Asian economies are vulnerable to events in Iran, a risk for the corporate sector. The US is better placed (slide 10)
Large amounts of IG issuance remains a theme (slides 11-15). Markets have been unperturbed, with tight spreads highlighting the strength of demand
Hyperscaler bond issuance continues to soar, a trend that is set to continue.
Ultimately, demand remains because, overall, fundamentals are supportive and current yields are attractive to many buyers, in isolation and vs cash (slide 16)
Chart of the month:
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