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Timely Perspectives, Unconventional Thinking 

We’re excited to share timely market insights, thoughtful perspectives and expert commentary as part of our commitment to providing modern investment solutions to modern challenges.

BLOGThe Bird's Eye View

Timely Perspectives, Unconventional Thinking 

We’re excited to share timely market insights, thoughtful perspectives and expert commentary as part of our commitment to providing modern investment solutions to modern challenges.

Alternatives

Credit Barometer: Selectivity Remains Key

Credit markets continue to offer supportive income opportunities, though the combination of tight spreads and increased price sensitivity suggests investors may not be fully accounting for underlying credit risk. As in recent months, yield movements across most sectors were modest, with a few notable exceptions.

Municipal bonds currently remain a standout, extending the trend seen last month as yields remain elevated relative to their historical averages. Investment grade munis’ tax-equivalent yield edged down slightly to 5.7% but remains comfortably above long-term averages.1 High yield munis also saw yields drift modestly lower, while short duration HY munis were relatively stable, reflecting the sector’s resilience on a tax-adjusted basis.

Across the broader credit landscape, monthly changes were limited. US Treasuries continue to offer unusually high income relative to their 20-year history, while private credit (10.1% yield-to-worst) and CCC rated corporate bonds (10.0%) once again delivered the highest absolute yields.2

Spreads remain tight, even after modest widening in November, leaving a thinner buffer should market volatility rise. With spreads currently sitting below volatility-implied fair-value levels, price sensitivity remains an important consideration. Overall, while current yields remain constructive, tight spreads and elevated volatility underscore the need for selectivity. Municipals, especially investment grade munis, continue to offer what we consider compelling after-tax income and remain one of the more attractive segments within today’s credit landscape.

Chart of Yield comparison across and within sectors
Chart of Current Yield vs 20 year history

1Source: Bloomberg, as of November 30, 2025.
2Source: Bloomberg, as of November 30, 2025.

The opinions expressed are not necessarily those of the firm. These materials are provided for informational purposes only. These opinions are not intended to be a forecast of future events, a guarantee of future results or investment advice. Any statistics contained herein have been obtained from sources believed to be reliable, but the accuracy of this information cannot be guaranteed. The views expressed herein may change at any time subsequent to the date of issue hereof. The information provided is not to be construed as a recommendation to buy, hold or sell, or the solicitation or an offer to buy or sell any fund or security.

Past performance does not guarantee future results.

Risk Disclosures

All investments involve the risk of loss of principal.

Municipal bonds are subject to credit risk, interest rate risk, liquidity risk, and call risk. However, the obligations of some municipal issuers may not be enforceable through the exercise of traditional creditors’ rights. The reorganization under federal bankruptcy laws of a municipal bond issuer may result in the bonds being cancelled without payment or repaid only in part, or in delays in collecting principal and interest.

The information is not intended to provide and should not be relied on for accounting or tax advice. Any tax information presented is not intended to constitute an analysis of all tax considerations.

Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Asset-backed securities (ABS) are debt securities whose payments of principal and interest are backed by the cash flow generated by pools of income-producing credit assets.

CCC credit rating—as used by S&P Global Ratings and Fitch Ratings—is a speculative-grade rating on a bond considered vulnerable and dependent on favorable business, financial and economic conditions to meet its financial commitments. The equivalent rating from Moody’s Investors Service is Caa.

Commercial mortgage-backed securities (CMBS) are debt securities whose payments of principal and interest are backed by the cash flow generated by pools of commercial real-estate mortgage loans.

A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of credit worthiness of an issuer with respect to debt obligations, including specific securities, money market instruments, or other bonds. Ratings are measured on a scale that generally ranges from AAA/Aaa (highest) to D/RD (lowest); ratings are subject to change without notice. Not Rated (NR) indicates that the debtor was not rated and should not be interpreted as indicating low quality.

Duration is a measure of a bond price's sensitivity to changes in interest rates.

High yield bonds (also called junk bonds) are bonds deemed by rating agencies to have a higher risk of default and thus offer investors a higher interest rate than investment grade bonds.

Investment grade bonds are bonds deemed by rating agencies to have a relatively low risk of default.

Leveraged loans typically refer to floating-rate commercial loans provided by a group of lenders to a noninvestment grade borrower.

Mortgage-backed securities (MBS) are debt securities whose payments of principal and interest are backed by the cash flow generated by pools of mortgage loans.

Private credit refers to a loan agreement between a borrower and single or small group of nonbank lenders. Private credit can also be referred to as “direct lending” or “private lending.”

Taxable equivalent yield (TEY) reflects the pretax yield that a taxable fixed-income investment would need to offer to produce the same after-tax yield as tax-exempt security. The TEY shown is calculated based on the most common federal tax bracket(s).

US Treasury securities are debt instruments backed by the full faith and credit of the US government.

Yield to Worst (YTW) is a financial metric that helps investors assess the minimum yield they can expect from a bond under various scenarios. It accounts for the bond’s yield in the worst-case scenario, considering factors like call provisions, prepayments, and other features that may affect the bond’s cash flows.

Indices are unmanaged and do not incur management fees or other operating expenses. One cannot invest directly in an index.

The Bloomberg Municipal Bond Index Total Return Index measures the performance of the USD-denominated long-term tax-exempt bond market, inclusive of state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds.

The Bloomberg Muni High Yield Total Return Index is a market-value weighted index designed to measure the performance of non-investment grade U.S. Municipal Bonds.

The Bloomberg Municipal High Yield Short Duration Index measures the performance of US high-yield municipal bonds with shorter maturities.

The Bloomberg US Treasury Total Return Index tracks the total return performance of the US Treasury market

The Bloomberg Global Aggregate Bond Index is a broad-based benchmark that measures the global investment grade debt from 24 local currency markets, including treasury, government related, corporate, and securitized fixed rate bonds from both developed and emerging markets.

The Bloomberg US Corporate Total Return Index measures the investment grade, fixed-rate, taxable corporate bond market and is inclusive of USD denominated securities publicly issues by US and non-US industrial, utility, and financial issuers.

The Bloomberg US Corporate High Yield Total Return Index measures the USD-denominated, high yield, fixed-rate corporate bond market.

The Bloomberg Ba US High Yield Total Return Index is a subset of the broader high yield index, focusing on bonds with a rating of Ba1/BB+,

The Bloomberg Caa US High Yield Total Return Index tracks the lowest-rated (Caa/CCC or lower) segment of the U.S. high yield corporate bond market.

The Bloomberg Global Emerging Markets Sovereign Index measures the performance of sovereign debt issued by emerging market countries in hard currencies.

The Bloomberg US Agg ABS Total Return Index tracks US investment-grade asset-backed securities (ABS).

The Bloomberg US MBS Index Total Return Index measures the performance of agency mortgage-backed securities (MBS).

The Bloomberg CMBS: Erisa Eligible Index measures the performance commercial mortgage-backed (CMBS) that are compliant with ERISA investment guidelines

The S&P UBS Leveraged Loan Index tracks the performance of senior secured syndicated loans made to below-investment-grade U.S. companies.

The Cliffwater Direct Lending Index is designed to track the performance of US direct lending strategies by institutional managers.

FEF Distributors, LLC (“FEFD”) (SIPC), a limited purpose broker-dealer, distributes certain First Eagle products. FEFD does not provide services to any investor but rather provides services to its First Eagle affiliates. As such, when FEFD presents a fund, strategy or other product to a prospective investor, FEFD and its representatives do not determine whether an investment in the fund, strategy or other product is in the best interests of, or is otherwise beneficial or suitable for, the investor. No statement by FEFD should be construed as a recommendation. Investors should exercise their own judgment and/or consult with a financial professional to determine whether it is advisable for the investor to invest in any First Eagle fund, strategy or product.

First Eagle Investments is the brand name for First Eagle Investment Management, LLC and its subsidiary investment advisers.

First Eagle Alternative Credit and Napier Park are brand names for the two subsidiary investment advisers engaged in the alternative credit business.

© 2025 First Eagle Investment Management, LLC. All rights reserved.

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