Market & Topical Perspectives

Alternative Credit: 2Q22 Review

Alternative Credit: 2Q22 Review

For traditional fixed income markets, the second quarter of 2022 was not unlike the first.

Key Takeaways

  • Key-Takeaway

    Despite growing concerns about the trajectory of the economy, credit fundamentals have remained mostly supportive. Market technicals, on the other hand, have weakened markedly.

  • Key-Takeaway

    At current prices, the loan market appears to be pricing in a mild recession but not a “hard landing.” Given considerable volatility, this could change rapidly—for better or worse.

  • Key-Takeaway

    The rapid increase in rates at the short end of the yield curve and generally wider spreads for higher-quality credits gives institutional investors a greater range of investment options and has been a headwind for the formation of collateralized loan obligations.

  • Key-Takeaway

    At First Eagle Alternative Credit, we leverage decades of credit experience in search of borrowers and market sectors best positioned to ride out an environment that may get worse before it gets better.

     

     

    Views expressed are as of July 28, 2022