1 00:00:18,320 --> 00:00:21,119 Speaker 1: Hello, Welcome to the Credit Edge Weekly Markets podcast. My 2 00:00:21,200 --> 00:00:24,200 Speaker 1: name is James Crumbie. I'm a senior editor at Bloomberg. 3 00:00:24,079 --> 00:00:28,240 Speaker 2: And I'm Jy Cooping, senior analyst at Bloomberg Intelligence. This week, 4 00:00:28,280 --> 00:00:31,600 Speaker 2: we are very pleased to welcome George Gordelia's chief investment 5 00:00:31,640 --> 00:00:36,240 Speaker 2: Officer Leverage Finance at Six Investment Advisors. How are you, George? 6 00:00:36,600 --> 00:00:37,879 Speaker 3: Very well? Thank you. 7 00:00:38,320 --> 00:00:41,280 Speaker 2: George has an extensive experience of the credit markets and 8 00:00:41,400 --> 00:00:44,680 Speaker 2: especially the high Yellen lever loan markets, built over a 9 00:00:44,720 --> 00:00:48,800 Speaker 2: more almost four decades of investment experience. He joined SEX 10 00:00:48,960 --> 00:00:51,240 Speaker 2: in two thousand and one as hedge of Leverage Finance 11 00:00:51,280 --> 00:00:54,960 Speaker 2: Research and is currently responsible for strategy oversight of the 12 00:00:55,040 --> 00:00:58,040 Speaker 2: high heel bond portfolio management activities, and he is a 13 00:00:58,080 --> 00:01:01,680 Speaker 2: senior portfolio manager for the Liverage Lon portfolios as well. 14 00:01:01,800 --> 00:01:04,960 Speaker 2: Prior to this, he was a senior HI research analyst 15 00:01:05,000 --> 00:01:07,520 Speaker 2: at JP Morgan. Such a pleasure to have you today 16 00:01:07,520 --> 00:01:08,800 Speaker 2: on your Credit Age podcast. 17 00:01:09,880 --> 00:01:12,119 Speaker 3: Thank you very much. Shere. Why pleasure to be here. 18 00:01:12,720 --> 00:01:15,039 Speaker 1: Thanks a lot, George. We've got tons of questions for you, 19 00:01:15,080 --> 00:01:16,800 Speaker 1: but I just wanted to kick off. You know, global 20 00:01:16,800 --> 00:01:19,480 Speaker 1: markets are on edge as the trade wars seem to 21 00:01:19,560 --> 00:01:24,360 Speaker 1: escalate and geopolitical risk gets ever higher, but credit spreads 22 00:01:24,400 --> 00:01:28,480 Speaker 1: just keep grinding lower. The global corporate yield premium hit 23 00:01:28,520 --> 00:01:30,720 Speaker 1: the lowest since two thousand and seven last week, leading 24 00:01:30,760 --> 00:01:35,000 Speaker 1: to renewed claims of complacency and mispriced risk. So George, 25 00:01:35,080 --> 00:01:37,040 Speaker 1: what's your take. You've been doing this for a long time. 26 00:01:37,520 --> 00:01:40,840 Speaker 1: Do very tight credit spreads show simply that there's more 27 00:01:40,880 --> 00:01:43,679 Speaker 1: demand for yield than that new supply of debt or 28 00:01:43,760 --> 00:01:46,759 Speaker 1: is this really a fundamentally safer market right now? 29 00:01:49,560 --> 00:01:52,600 Speaker 3: I think a couple of things on that, James. I 30 00:01:52,640 --> 00:01:56,320 Speaker 3: think that spreads are probably a little bit ahead of 31 00:01:56,360 --> 00:01:59,640 Speaker 3: themselves at this point. But I will also submit that 32 00:01:59,680 --> 00:02:03,360 Speaker 3: I say think economic growth will be better than expectations 33 00:02:03,360 --> 00:02:07,560 Speaker 3: this year. As you know, cash levels not only with 34 00:02:07,640 --> 00:02:12,320 Speaker 3: investors but with consumers remain at record levels. Whether we're 35 00:02:12,320 --> 00:02:16,520 Speaker 3: looking at checking savings money market, you know, well well 36 00:02:16,560 --> 00:02:22,720 Speaker 3: above pre COVID levels still in almost every income bracket 37 00:02:22,800 --> 00:02:25,600 Speaker 3: as well. If you if you take the kind of 38 00:02:25,680 --> 00:02:30,359 Speaker 3: top you know it takes six income brackets. Five of 39 00:02:30,520 --> 00:02:36,040 Speaker 3: six are higher, and again significantly higher than twenty nineteen. 40 00:02:36,160 --> 00:02:40,040 Speaker 3: So there's a lot of dry powder I think across 41 00:02:40,080 --> 00:02:44,480 Speaker 3: the board and we have you know, credit market in 42 00:02:44,600 --> 00:02:48,639 Speaker 3: particular on high yield leverage finance, but hasn't really grown 43 00:02:48,680 --> 00:02:50,880 Speaker 3: over the last three four years only like you know, 44 00:02:50,960 --> 00:02:52,880 Speaker 3: last year we did see a little bit of growth, 45 00:02:52,919 --> 00:02:56,119 Speaker 3: but prior to that, the market on a net basis 46 00:02:56,400 --> 00:02:59,680 Speaker 3: actually shrunk. So there was the you know, there there 47 00:02:59,800 --> 00:03:04,040 Speaker 3: was an explosion of credit kind of twenty you know, 48 00:03:04,120 --> 00:03:07,920 Speaker 3: let's call it five years prior to you know, twenty two, 49 00:03:09,360 --> 00:03:12,320 Speaker 3: and then we just started seeing more names disappearing, whether 50 00:03:12,360 --> 00:03:15,800 Speaker 3: it was M and A, whether it was refinancing in 51 00:03:15,840 --> 00:03:22,000 Speaker 3: the private credit market. So while we do see a 52 00:03:22,000 --> 00:03:26,040 Speaker 3: lot of large deals hit the market, we are also 53 00:03:26,200 --> 00:03:29,880 Speaker 3: seeing many names that are leaving us very quietly. 54 00:03:31,800 --> 00:03:34,080 Speaker 2: So if we stay with them at the macro level 55 00:03:34,280 --> 00:03:39,240 Speaker 2: and maybe adopt a top, top down approach. So you're 56 00:03:39,280 --> 00:03:43,720 Speaker 2: expecting growth to continue, demand to continue, what does it 57 00:03:43,760 --> 00:03:47,000 Speaker 2: translate into in terms of inflation and interest rates? In 58 00:03:47,040 --> 00:03:47,480 Speaker 2: your mind? 59 00:03:48,320 --> 00:03:51,640 Speaker 3: Yeah, I do think that the you know, the kind 60 00:03:51,640 --> 00:03:55,720 Speaker 3: of general market belief that we're going to see multiple 61 00:03:56,000 --> 00:04:01,400 Speaker 3: rate cuts this year and inflation and the FED is 62 00:04:01,440 --> 00:04:06,040 Speaker 3: going to be more dubbish. I'm not sure we subscribe 63 00:04:06,080 --> 00:04:09,280 Speaker 3: to that. I think I think we're you know, PCEE 64 00:04:09,560 --> 00:04:13,840 Speaker 3: still closer to much closer to three than two. We've heard, 65 00:04:14,040 --> 00:04:16,880 Speaker 3: you know, just over the last ten days or so 66 00:04:17,120 --> 00:04:22,440 Speaker 3: where following the lawsuit against the FED, that you know, 67 00:04:22,480 --> 00:04:25,919 Speaker 3: we heard multiple FED governors speak out in supportive power 68 00:04:26,080 --> 00:04:33,400 Speaker 3: and supportive current monetary policy that essentially, you know, highlights 69 00:04:33,480 --> 00:04:38,039 Speaker 3: that that rates are not going to necessarily come down 70 00:04:38,120 --> 00:04:43,640 Speaker 3: because inflation has not the battle has not been has won. 71 00:04:44,760 --> 00:04:47,400 Speaker 3: So we've cut about one hundred and seventy five without 72 00:04:47,440 --> 00:04:51,600 Speaker 3: our recession. It's never been done before. So you know, 73 00:04:51,760 --> 00:04:53,920 Speaker 3: I do think that there might be one or two 74 00:04:53,960 --> 00:04:56,680 Speaker 3: economists out there that are calling for no rate cuts 75 00:04:56,720 --> 00:04:59,479 Speaker 3: this year. I'm not sure I'd go that far, but 76 00:04:59,680 --> 00:05:04,760 Speaker 3: ultimate I do think that, you know, we have again 77 00:05:05,839 --> 00:05:11,320 Speaker 3: strong cash levels. We have the OBBA, which again based 78 00:05:11,360 --> 00:05:14,280 Speaker 3: on estimates, could return two hundred to two hundred and 79 00:05:14,320 --> 00:05:19,680 Speaker 3: fifty billion additional tax refunds to consumers, so that can 80 00:05:19,720 --> 00:05:23,599 Speaker 3: also be inflationary. And I think the administration is going 81 00:05:23,680 --> 00:05:26,960 Speaker 3: to use all tools at its disposal to make sure 82 00:05:27,040 --> 00:05:29,160 Speaker 3: this economy does well this. 83 00:05:29,200 --> 00:05:33,040 Speaker 1: Year, So high rates, George, if there are no rate cuts, 84 00:05:33,600 --> 00:05:36,800 Speaker 1: that presumably makes it well, it keeps things tough for 85 00:05:36,839 --> 00:05:39,280 Speaker 1: the weaker borrowers who have been kind of struggling through 86 00:05:39,279 --> 00:05:41,599 Speaker 1: this period of high rates and hoping that they would 87 00:05:41,640 --> 00:05:44,000 Speaker 1: come down, and you know, hoping that you know, the 88 00:05:44,000 --> 00:05:45,719 Speaker 1: Trump guys were right that they should cut by one 89 00:05:45,800 --> 00:05:48,440 Speaker 1: hundred and fifty bass points. If that's not happening, those 90 00:05:48,440 --> 00:05:52,039 Speaker 1: guys are under pressure. So waterfalls. And also does that 91 00:05:52,160 --> 00:05:54,920 Speaker 1: mean less LBO activity, less M and A, so let's 92 00:05:54,920 --> 00:05:55,880 Speaker 1: supply on that side. 93 00:05:57,000 --> 00:06:01,200 Speaker 3: I think we will see the faults they at current levels, 94 00:06:01,240 --> 00:06:03,800 Speaker 3: you know, plus minus a half a percentage point. We 95 00:06:03,880 --> 00:06:06,440 Speaker 3: do not see the faults declining to let's say sub 96 00:06:06,480 --> 00:06:09,560 Speaker 3: two percent. I think, you know, we did decline during 97 00:06:09,600 --> 00:06:12,960 Speaker 3: the year, again depending on which one you look at, 98 00:06:13,000 --> 00:06:16,760 Speaker 3: but you know, we kind of got very close to 99 00:06:16,839 --> 00:06:19,599 Speaker 3: four and we ended the year just under three. So 100 00:06:19,720 --> 00:06:23,039 Speaker 3: I think from three we you know, it's a rolling number, 101 00:06:23,120 --> 00:06:25,680 Speaker 3: so something can roll off one month and then it drops, 102 00:06:25,720 --> 00:06:28,400 Speaker 3: and then something can can hit the next month and 103 00:06:28,440 --> 00:06:30,279 Speaker 3: its spikes. But I do think will kind of be 104 00:06:30,320 --> 00:06:31,560 Speaker 3: in this two and a half to three and a 105 00:06:31,600 --> 00:06:35,240 Speaker 3: half percent range. I think it'll be a higher default 106 00:06:35,680 --> 00:06:38,440 Speaker 3: rate cycle than we have seen in other years where 107 00:06:38,440 --> 00:06:40,760 Speaker 3: it goes up and then it comes down very quickly. 108 00:06:42,000 --> 00:06:45,200 Speaker 3: Precisely for the reason that that you just highlighted. I 109 00:06:45,240 --> 00:06:49,599 Speaker 3: think we have a lot of you know, column credit 110 00:06:49,720 --> 00:06:53,440 Speaker 3: zombies uh B three B minus or triple C rated 111 00:06:53,480 --> 00:06:57,680 Speaker 3: credits that still have very very weak interest coverage, generating 112 00:06:57,800 --> 00:07:02,640 Speaker 3: zero free cash flow, cannot expand their businesses because they 113 00:07:02,680 --> 00:07:06,080 Speaker 3: don't have the capital to do it, so likely could 114 00:07:06,160 --> 00:07:10,760 Speaker 3: mean more lmes, could be repeat lmes for some guys. 115 00:07:11,320 --> 00:07:14,600 Speaker 3: Could could be repeat Chapter eleven for some guys. So 116 00:07:16,200 --> 00:07:20,400 Speaker 3: you know, certainly there there are my you know, minefields 117 00:07:20,440 --> 00:07:24,840 Speaker 3: to avoid in this market. Given that the loan market 118 00:07:25,160 --> 00:07:28,240 Speaker 3: is quite different from high yield, where you've got you know, 119 00:07:28,480 --> 00:07:31,800 Speaker 3: more lower rated credits by virtue of the market being 120 00:07:31,960 --> 00:07:35,920 Speaker 3: you know, seventy five percent or so sponsor sponsor based, 121 00:07:36,640 --> 00:07:39,560 Speaker 3: you do have you know, more single be rated credits 122 00:07:40,120 --> 00:07:43,920 Speaker 3: and credits that still were vintage twenty one twenty two 123 00:07:44,120 --> 00:07:48,920 Speaker 3: that were predicated on sofa staying near zero and obviously 124 00:07:48,960 --> 00:07:52,040 Speaker 3: that that is no longer the case. But spreads have 125 00:07:52,120 --> 00:07:55,600 Speaker 3: come in, so that'll offset some of the you know, 126 00:07:55,720 --> 00:07:58,560 Speaker 3: lack of rate fed cuts. You know, we have seen 127 00:07:58,560 --> 00:08:01,800 Speaker 3: a lot of refinancing, a lot of repricings, and that 128 00:08:01,840 --> 00:08:04,520 Speaker 3: will help a lot of borrowers, but obviously the ones 129 00:08:04,520 --> 00:08:09,360 Speaker 3: that need it most can't refine, so certainly remains a 130 00:08:09,480 --> 00:08:10,600 Speaker 3: concern for the market. 131 00:08:12,400 --> 00:08:15,800 Speaker 2: So when you're looking at the market, what part of 132 00:08:15,840 --> 00:08:18,880 Speaker 2: the credit markets we're rating buckets do you think is 133 00:08:18,920 --> 00:08:22,280 Speaker 2: the most attractive right now, has the best risk reward profile. 134 00:08:23,360 --> 00:08:27,040 Speaker 3: I would say, you know, the higher quality single B 135 00:08:27,240 --> 00:08:30,000 Speaker 3: rated credits and some you know, I think the double 136 00:08:30,040 --> 00:08:33,839 Speaker 3: B rated credits are going to always perform well. It 137 00:08:34,200 --> 00:08:37,800 Speaker 3: is a relatively small part of the market. Clos need 138 00:08:37,920 --> 00:08:41,400 Speaker 3: double B ready credits for quality tests, and the double 139 00:08:41,440 --> 00:08:44,920 Speaker 3: B Ready credits are always in high demand. Majority of 140 00:08:45,000 --> 00:08:47,160 Speaker 3: you know, you have fewer l bos in the double 141 00:08:47,160 --> 00:08:50,560 Speaker 3: B space almost by definition, a lot of public names, 142 00:08:50,640 --> 00:08:55,040 Speaker 3: good market caps, companies that are growing and have their 143 00:08:55,120 --> 00:08:59,600 Speaker 3: resources to expand. So I think kind of you know, 144 00:08:59,720 --> 00:09:02,640 Speaker 3: either very high quality B two which may sound like 145 00:09:02,679 --> 00:09:06,760 Speaker 3: an oxymoron, but some names that you know, the agencies 146 00:09:06,800 --> 00:09:09,760 Speaker 3: move a little bit slower where the market recognizes that 147 00:09:09,840 --> 00:09:12,400 Speaker 3: the quality is better than a B two. But B 148 00:09:12,880 --> 00:09:15,640 Speaker 3: one and B two rated credits that are performing well, 149 00:09:15,720 --> 00:09:18,520 Speaker 3: I think are probably the best part of the market 150 00:09:18,760 --> 00:09:19,240 Speaker 3: right now. 151 00:09:19,679 --> 00:09:22,200 Speaker 1: Going back to the troublespot, so are they the things 152 00:09:22,240 --> 00:09:26,240 Speaker 1: we already know about like retail and you know, the 153 00:09:26,240 --> 00:09:28,080 Speaker 1: stuff that's been in trouble for a long time. Or 154 00:09:28,280 --> 00:09:30,600 Speaker 1: do you expect other parts of the economy to start 155 00:09:30,640 --> 00:09:31,160 Speaker 1: to suffer? 156 00:09:33,120 --> 00:09:36,320 Speaker 3: Yeah, I think, you know, I think the three what 157 00:09:36,400 --> 00:09:40,200 Speaker 3: I call the three big LBO sectors, so it's tech, healthcare, 158 00:09:40,920 --> 00:09:44,280 Speaker 3: and a kind of broad catch all called services, which 159 00:09:44,880 --> 00:09:47,480 Speaker 3: you could argue some of those look like tech companies 160 00:09:47,600 --> 00:09:51,200 Speaker 3: in that in that they're kind of software services. I 161 00:09:51,240 --> 00:09:54,959 Speaker 3: think those three sectors will continue to face the most headwinds. 162 00:09:55,600 --> 00:09:58,960 Speaker 3: A lot of you know, a lot of credits that 163 00:09:59,200 --> 00:10:04,280 Speaker 3: came to market, it with a lot of what's call 164 00:10:04,320 --> 00:10:09,000 Speaker 3: them add backs and synergies that have come partly to 165 00:10:09,080 --> 00:10:13,319 Speaker 3: fruition but not totally to fruition. So if a company 166 00:10:13,440 --> 00:10:15,640 Speaker 3: was six and a half or seven times levered with 167 00:10:15,679 --> 00:10:18,559 Speaker 3: all the synergies baked in, there is seven and a 168 00:10:18,600 --> 00:10:21,160 Speaker 3: half or eight and a half times levered with part 169 00:10:21,320 --> 00:10:24,360 Speaker 3: or none. And the agencies are waking up to this, 170 00:10:24,520 --> 00:10:26,920 Speaker 3: and we've seen a lot of downgrades. You know, whereas 171 00:10:26,960 --> 00:10:31,880 Speaker 3: high yield had more upgrades than downgrades last year roughly 172 00:10:31,960 --> 00:10:35,479 Speaker 3: two to one. The other way in LANs two downgrades 173 00:10:35,520 --> 00:10:39,960 Speaker 3: to every upgrade and that reflects business plans that have 174 00:10:40,040 --> 00:10:43,160 Speaker 3: not met expectations. And these companies that were rated B 175 00:10:43,280 --> 00:10:46,440 Speaker 3: two or B three at a minimum are going on 176 00:10:46,520 --> 00:10:51,160 Speaker 3: negative outlook, negative watch, or just outright downgrade. And that 177 00:10:51,280 --> 00:10:55,280 Speaker 3: also presents, you know, an issue for refinancing, right because 178 00:10:55,320 --> 00:10:59,439 Speaker 3: these companies that might have gotten downgraded to triple C 179 00:11:00,520 --> 00:11:03,959 Speaker 3: now have more or less lost access to the loan market. 180 00:11:04,080 --> 00:11:09,400 Speaker 3: Clo buyers cannot buy triple cs, so you're you're in 181 00:11:09,480 --> 00:11:13,160 Speaker 3: a bind. And that's where I think when an issue 182 00:11:13,400 --> 00:11:16,360 Speaker 3: might pick up the phone and try to refinance in 183 00:11:16,400 --> 00:11:18,120 Speaker 3: the in the private credit space. 184 00:11:18,920 --> 00:11:20,640 Speaker 1: Going back to tech though, I mean everyone seems to 185 00:11:20,640 --> 00:11:23,240 Speaker 1: be really bullish on technology generally, but when we're talking 186 00:11:23,240 --> 00:11:26,520 Speaker 1: about high yield technology, we're talking about what software that's 187 00:11:26,559 --> 00:11:29,880 Speaker 1: maybe going to be obsolete or companies that build apps 188 00:11:29,920 --> 00:11:32,560 Speaker 1: that they can't actually you know, make any money out of. 189 00:11:32,559 --> 00:11:34,480 Speaker 1: What's what's the tech that you're talking about. 190 00:11:34,760 --> 00:11:40,320 Speaker 3: Yeah, it's not the Mac seven. So there's hardware in 191 00:11:40,360 --> 00:11:43,080 Speaker 3: our space, you know. So there are companies like Ultra 192 00:11:43,240 --> 00:11:47,520 Speaker 3: Tech and Cyper Semiconductor and a few others. Those are fine. 193 00:11:48,000 --> 00:11:51,319 Speaker 3: So the hardware guys public companies low leverage and no 194 00:11:51,440 --> 00:11:56,120 Speaker 3: sponsors and then you've got the services side. Software. Some 195 00:11:56,160 --> 00:11:59,800 Speaker 3: of these guys have niches where they perform pretty well, 196 00:12:00,200 --> 00:12:05,800 Speaker 3: like Norton for example, the anti virus name double Be 197 00:12:05,800 --> 00:12:10,400 Speaker 3: Credit performing well public. And then you have LBOs, Right, 198 00:12:10,520 --> 00:12:12,640 Speaker 3: So there are a bunch of sponsors that you know, 199 00:12:12,720 --> 00:12:16,000 Speaker 3: brought a lot of tech names over the last five years, 200 00:12:16,760 --> 00:12:21,520 Speaker 3: and you know, some of them do compete against you know, 201 00:12:21,720 --> 00:12:25,760 Speaker 3: investment grade guys, right, and think about the resources that 202 00:12:25,920 --> 00:12:29,440 Speaker 3: the big software guys have on you know, on the 203 00:12:29,480 --> 00:12:34,400 Speaker 3: investment grade side, and someone can just turn a feature 204 00:12:34,480 --> 00:12:37,480 Speaker 3: on and put someone out of business. And we've seen 205 00:12:37,520 --> 00:12:42,840 Speaker 3: a couple of examples of that. So it is, you know, 206 00:12:42,920 --> 00:12:47,679 Speaker 3: it's a sector that had you know, big multiples, so 207 00:12:47,800 --> 00:12:52,120 Speaker 3: you would have expected double digit growth if you're you know, 208 00:12:52,200 --> 00:12:55,960 Speaker 3: if you were purchased for fifteen or twenty times eb DA, 209 00:12:56,120 --> 00:12:59,440 Speaker 3: and we're seeing in many cases single digit, low single 210 00:12:59,480 --> 00:13:05,000 Speaker 3: digit or or even negative growth. So your cap structure 211 00:13:05,040 --> 00:13:08,760 Speaker 3: becomes very unsustainable. So if you look at the loan market, 212 00:13:08,960 --> 00:13:14,240 Speaker 3: let's say loans trading below eighty the unofficial definition of distressed, 213 00:13:15,920 --> 00:13:19,079 Speaker 3: it's about you know, forty five percent of the market 214 00:13:19,760 --> 00:13:22,480 Speaker 3: of distressed. There are in those three sectors. I don't 215 00:13:22,480 --> 00:13:26,440 Speaker 3: think that's you know, that's that's a surprise, you know, 216 00:13:26,559 --> 00:13:28,840 Speaker 3: given just how many LBOs are in there. 217 00:13:29,440 --> 00:13:32,040 Speaker 2: Heal scare is one of the sector that you mentioned earlier, 218 00:13:32,080 --> 00:13:34,360 Speaker 2: and if I hear you correctly, you're seem to be 219 00:13:34,400 --> 00:13:38,560 Speaker 2: fairly cacious or prudent on getting exposure to to to healthcare. 220 00:13:39,200 --> 00:13:41,880 Speaker 2: It's interesting because on the one hand, it's a sector 221 00:13:41,920 --> 00:13:47,079 Speaker 2: that also benefits from pretty solid fundamentals, I mean aging 222 00:13:47,160 --> 00:13:52,079 Speaker 2: population and number of and met medical needs, et cetera. 223 00:13:52,240 --> 00:13:55,040 Speaker 2: So you you would think on the one hand, it's 224 00:13:55,080 --> 00:13:59,480 Speaker 2: a sector that that should grow and attract investment going forward. 225 00:13:59,600 --> 00:14:02,040 Speaker 2: At the same same time, if we look at healthcare 226 00:14:02,080 --> 00:14:04,960 Speaker 2: in the past few years, we've seen significant pickup in 227 00:14:05,000 --> 00:14:08,839 Speaker 2: default in twenty twenty two and twenty three, especially in 228 00:14:08,920 --> 00:14:13,959 Speaker 2: the low single bees, and as you pointed out, we've 229 00:14:13,960 --> 00:14:18,520 Speaker 2: seen a lot of highly leveraged transactions also in that space. Now, 230 00:14:19,360 --> 00:14:22,880 Speaker 2: are you concerned when you mentioned LBO they had some 231 00:14:23,280 --> 00:14:28,160 Speaker 2: companies in investment grade category could become and especially public 232 00:14:28,160 --> 00:14:31,200 Speaker 2: companies could become the target of LBO activity or are 233 00:14:31,240 --> 00:14:35,640 Speaker 2: you more talking about smaller players that are the typical 234 00:14:35,720 --> 00:14:39,040 Speaker 2: target for private equity sponsors. 235 00:14:39,160 --> 00:14:43,640 Speaker 3: Yeah, more existing names. You know, a lot historically, excluding 236 00:14:43,640 --> 00:14:46,520 Speaker 3: in the last three years. You know, healthcare was probably 237 00:14:46,720 --> 00:14:52,960 Speaker 3: one of the most dependable sectors and loans and high yield. 238 00:14:53,160 --> 00:14:56,080 Speaker 3: A lot of hospital companies. Now some have graduated, like 239 00:14:56,320 --> 00:14:59,440 Speaker 3: HCA moved on to investment grade. They finally got upgraded. 240 00:15:00,080 --> 00:15:03,200 Speaker 3: So the hospital space even today, the few names that 241 00:15:03,280 --> 00:15:07,520 Speaker 3: are left are are doing are doing well, so we 242 00:15:07,600 --> 00:15:09,880 Speaker 3: have really no concerns there. But there were a lot 243 00:15:09,920 --> 00:15:15,600 Speaker 3: of service providers in healthcare that were lboed and some 244 00:15:15,680 --> 00:15:21,520 Speaker 3: of these credits have experienced, you know, significant headwinds, and 245 00:15:21,760 --> 00:15:25,600 Speaker 3: you know, we've seen whether it's you know, outsourcing of 246 00:15:25,880 --> 00:15:30,360 Speaker 3: nurses or physicians or er doctors. Those were you know, 247 00:15:31,120 --> 00:15:36,960 Speaker 3: some of the categories software services for healthcare providers. Some 248 00:15:37,040 --> 00:15:41,320 Speaker 3: of these companies have run into issues and again probably 249 00:15:41,440 --> 00:15:45,320 Speaker 3: just too much leverage put on these credits in a 250 00:15:45,480 --> 00:15:50,720 Speaker 3: sector where you know, the government can change reimbursement policies 251 00:15:51,600 --> 00:15:54,560 Speaker 3: stroke of a pen right and you might have been 252 00:15:54,600 --> 00:15:57,760 Speaker 3: five times levered. That could go to seven or ten 253 00:15:58,560 --> 00:16:03,280 Speaker 3: if if reimbursement rates get get slashed. So it's a 254 00:16:03,320 --> 00:16:07,200 Speaker 3: sector where it really doesn't pay to be levered up. 255 00:16:07,520 --> 00:16:10,680 Speaker 2: What's how your top peek nd pats. In terms of industries, 256 00:16:11,400 --> 00:16:14,360 Speaker 2: I mean, we've liked aerospace and defense here the last 257 00:16:14,360 --> 00:16:14,920 Speaker 2: few years. 258 00:16:14,920 --> 00:16:17,640 Speaker 3: They obviously had a very tough twenty twenty and they 259 00:16:18,360 --> 00:16:24,640 Speaker 3: they slowly rebounded and right now, you know, they're just 260 00:16:24,720 --> 00:16:29,120 Speaker 3: hitting on all cylinders. So you know, it's a sector 261 00:16:29,160 --> 00:16:31,720 Speaker 3: that that we continue to like. Some of the satellite 262 00:16:31,720 --> 00:16:38,960 Speaker 3: guys are are playing out nicely, I would say, gaming hotels, 263 00:16:40,040 --> 00:16:43,760 Speaker 3: you know, pretty consistent performance. You know, we've seen a 264 00:16:43,800 --> 00:16:47,520 Speaker 3: little weaker traffic at some of the you know, some 265 00:16:47,680 --> 00:16:52,640 Speaker 3: of the providers, but overall, again pretty conservative balance sheets 266 00:16:52,680 --> 00:16:57,000 Speaker 3: and nothing that you know is alarming. And and energy 267 00:16:57,040 --> 00:17:00,480 Speaker 3: has done well now, and energy and loans it really 268 00:17:00,520 --> 00:17:03,600 Speaker 3: concentrated just on midstream, so you know, I would think 269 00:17:03,640 --> 00:17:06,639 Speaker 3: of them as kind of glorified toll takers. They're moving 270 00:17:06,720 --> 00:17:10,800 Speaker 3: product from point A to point B and receiving compensation, 271 00:17:11,000 --> 00:17:15,720 Speaker 3: so there's no drilling risk, there's no big cap X budgets. 272 00:17:15,800 --> 00:17:18,960 Speaker 3: Most of these guys are rated you know, high, single B, 273 00:17:19,160 --> 00:17:23,000 Speaker 3: double B, even though many of them are owned by sponsors. 274 00:17:23,000 --> 00:17:26,080 Speaker 3: But it's a select few that have a lot of 275 00:17:26,119 --> 00:17:29,200 Speaker 3: expertise in the space and are not over levering their 276 00:17:29,240 --> 00:17:32,520 Speaker 3: credits very few, you know, outside of what happened in 277 00:17:32,560 --> 00:17:35,760 Speaker 3: twenty fifteen sixteen where a lot of service providers and 278 00:17:36,000 --> 00:17:40,800 Speaker 3: energy went belly up. The midstream guys have performed well 279 00:17:40,880 --> 00:17:44,679 Speaker 3: in pretty much all you know, pricing environments. 280 00:17:45,160 --> 00:17:48,040 Speaker 1: So you mentioned earlier private credit, George, I want to 281 00:17:48,040 --> 00:17:50,159 Speaker 1: ask you about that. I know you don't directly invest 282 00:17:50,200 --> 00:17:53,560 Speaker 1: in private credit, right, correct, you don't, so, but there 283 00:17:53,640 --> 00:17:56,400 Speaker 1: is definitely an impact. I mean, we've we've had conversations 284 00:17:56,400 --> 00:17:58,880 Speaker 1: with guests on this show about how, you know, there's 285 00:17:58,920 --> 00:18:01,880 Speaker 1: a kind of a a positive effect on high yield 286 00:18:01,880 --> 00:18:03,800 Speaker 1: and leverage loan markets, and that some of the deals 287 00:18:03,800 --> 00:18:06,800 Speaker 1: that would not be done in public markets for whatever 288 00:18:06,800 --> 00:18:10,600 Speaker 1: reason are being taken up by private markets that are 289 00:18:10,680 --> 00:18:13,200 Speaker 1: just growing so quickly. There's so much cash in those 290 00:18:13,240 --> 00:18:15,359 Speaker 1: markets that needs to be put to work. 291 00:18:16,400 --> 00:18:16,639 Speaker 3: You know. 292 00:18:16,880 --> 00:18:19,040 Speaker 1: The the private credit guys pushed back and say, no, 293 00:18:19,080 --> 00:18:20,720 Speaker 1: we would would never do a deal that, you know, 294 00:18:20,760 --> 00:18:24,480 Speaker 1: we thought it was too risky. Nonetheless, I'm interested in 295 00:18:24,480 --> 00:18:28,160 Speaker 1: your views about what impact it's having on the public 296 00:18:28,560 --> 00:18:31,080 Speaker 1: market in terms of pricing, supply, that sort of thing. 297 00:18:32,640 --> 00:18:38,440 Speaker 3: Yeah, it has definitely increased competition for deals, So we 298 00:18:39,000 --> 00:18:42,600 Speaker 3: have we have seen some of our names move over 299 00:18:43,160 --> 00:18:48,240 Speaker 3: to that side, and not because they had credit issues 300 00:18:48,359 --> 00:18:50,280 Speaker 3: or might have been you know, downgraded to triple C, 301 00:18:50,600 --> 00:18:55,199 Speaker 3: but could be for terms flexibility, speed to market, what 302 00:18:55,440 --> 00:18:59,160 Speaker 3: have you. And then you know, there's the the other 303 00:18:59,240 --> 00:19:02,600 Speaker 3: half that we touched done earlier, which is names that 304 00:19:02,640 --> 00:19:08,000 Speaker 3: really cannot refinance in our market that have moved over 305 00:19:08,160 --> 00:19:12,240 Speaker 3: and in some respects that you know, that helps our 306 00:19:12,280 --> 00:19:15,240 Speaker 3: market cleanse itself a little bit of of some lower 307 00:19:15,359 --> 00:19:20,280 Speaker 3: quality names that you know may have run into issues 308 00:19:20,280 --> 00:19:25,280 Speaker 3: potentially you know, defaulting. So in that respect that we 309 00:19:25,280 --> 00:19:28,560 Speaker 3: we welcome those refinancing, whether we own them or not. 310 00:19:28,720 --> 00:19:32,640 Speaker 3: It's just, you know, it's nice to see them leave 311 00:19:32,640 --> 00:19:36,560 Speaker 3: our market. We had one that was trying to refinance 312 00:19:36,760 --> 00:19:41,080 Speaker 3: right before the holidays and ultimately an asset manager that 313 00:19:42,200 --> 00:19:46,080 Speaker 3: you know went to the private credit markets and and 314 00:19:46,200 --> 00:19:51,960 Speaker 3: got it done seemingly very easily. So so it's you know, 315 00:19:52,160 --> 00:19:52,920 Speaker 3: it is a. 316 00:19:54,680 --> 00:19:54,720 Speaker 2: It. 317 00:19:55,600 --> 00:20:00,159 Speaker 3: We welcome them, and I think we will continue to 318 00:20:00,200 --> 00:20:02,719 Speaker 3: see them be a force in the market given you know, 319 00:20:02,760 --> 00:20:07,080 Speaker 3: the money that was raised that it's unlikely to be 320 00:20:07,160 --> 00:20:11,240 Speaker 3: returned and will be deployed over the course of the 321 00:20:11,320 --> 00:20:14,520 Speaker 3: you know, next year or two or three do. 322 00:20:14,480 --> 00:20:16,879 Speaker 1: You get the sense that there are big problems bringing 323 00:20:16,960 --> 00:20:18,760 Speaker 1: that market and you know, there are lots so many 324 00:20:18,760 --> 00:20:21,439 Speaker 1: of the deals that being done that you know, unsustainable 325 00:20:21,760 --> 00:20:23,639 Speaker 1: and that ultimately will blow up. I mean that seems 326 00:20:23,680 --> 00:20:25,199 Speaker 1: to be the sense from some of the regulators and 327 00:20:25,200 --> 00:20:26,840 Speaker 1: some of the multilaterals who are chiming in. 328 00:20:27,800 --> 00:20:31,040 Speaker 3: Yeah. Look, I think that the core you know, we 329 00:20:31,400 --> 00:20:34,120 Speaker 3: used to call this market the middle market space. 330 00:20:34,200 --> 00:20:36,879 Speaker 1: It's gotten very big recently, but it's gotten bigger. 331 00:20:36,960 --> 00:20:39,840 Speaker 3: So you know, I think that the private credit moniker 332 00:20:40,080 --> 00:20:44,520 Speaker 3: was a marketing genius and it seems to have really 333 00:20:44,640 --> 00:20:47,199 Speaker 3: obviously caught on. But look, I think a lot of 334 00:20:47,200 --> 00:20:50,560 Speaker 3: the middle market companies that that you know that we're 335 00:20:50,600 --> 00:20:55,439 Speaker 3: aware they're doing fine, just like the accesses and you know, 336 00:20:55,640 --> 00:20:58,639 Speaker 3: maybe three four years ago in our market where we 337 00:20:58,720 --> 00:21:06,399 Speaker 3: had a lot of you know, large LBOs with excessive leverage. Yeah, 338 00:21:06,480 --> 00:21:08,480 Speaker 3: I mean, there's going to be fallout. So I don't 339 00:21:08,480 --> 00:21:10,439 Speaker 3: think private credit is going to be immune from that. 340 00:21:11,080 --> 00:21:14,600 Speaker 3: There's a lot of competition for deals and ultimately underwriting 341 00:21:14,640 --> 00:21:20,120 Speaker 3: standards probably get lowered, and anytime any sector gets overbanked, 342 00:21:20,200 --> 00:21:24,359 Speaker 3: there's always fallout. We talked about energy from ten years ago. 343 00:21:24,440 --> 00:21:27,880 Speaker 3: We saw that sector get overbanked. Twenty five years ago 344 00:21:28,000 --> 00:21:32,440 Speaker 3: when telecom blew up, that sector got overbanked. So anytime 345 00:21:32,640 --> 00:21:36,520 Speaker 3: sectors get overbanked, we're seeing it with tech right now, 346 00:21:36,600 --> 00:21:39,240 Speaker 3: which also got overbanked, and you know it roughly twenty 347 00:21:39,240 --> 00:21:44,280 Speaker 3: percent of the loan market. There's fallout, So I expect 348 00:21:44,280 --> 00:21:48,000 Speaker 3: that will likely be the case in private credit. We're 349 00:21:48,040 --> 00:21:50,919 Speaker 3: already hearing now that private credit underwriters are in some 350 00:21:51,000 --> 00:21:54,919 Speaker 3: cases going cup light, which would have been unthinkable in 351 00:21:54,960 --> 00:21:59,280 Speaker 3: the middle market space. So you can see how underwriting 352 00:21:59,320 --> 00:22:02,080 Speaker 3: standards have become, you know, a little bit more lax, 353 00:22:02,920 --> 00:22:06,040 Speaker 3: and that's certainly something that bears watching. 354 00:22:06,880 --> 00:22:09,680 Speaker 1: But as an investor yourself, why not go in with 355 00:22:09,880 --> 00:22:13,080 Speaker 1: the extra two hundred basis points and the supposed stability 356 00:22:13,160 --> 00:22:15,560 Speaker 1: and the you know, all the benefits that these guys 357 00:22:15,560 --> 00:22:17,840 Speaker 1: are touting. Why why wouldn't you jump on that opportunity. 358 00:22:19,600 --> 00:22:25,440 Speaker 3: It's nothing for free. So I would say that additional 359 00:22:25,520 --> 00:22:29,240 Speaker 3: yield means additional credit risks. So I think it's a 360 00:22:29,280 --> 00:22:32,560 Speaker 3: function of you know what your credit risk is and 361 00:22:32,600 --> 00:22:36,720 Speaker 3: how much you're willing to, you know, to to take right, 362 00:22:36,760 --> 00:22:39,760 Speaker 3: there's also potential. Again I'm not familiar with the terms 363 00:22:39,800 --> 00:22:43,480 Speaker 3: of every what everyone is is charging, but there's there's 364 00:22:43,640 --> 00:22:50,679 Speaker 3: liquidity differences as well. So so for that additional yield, 365 00:22:51,000 --> 00:22:55,000 Speaker 3: you're probably giving up some liquidity as well. That you know, 366 00:22:55,040 --> 00:22:57,119 Speaker 3: if we have a few more days like today, that 367 00:22:58,960 --> 00:23:01,840 Speaker 3: you might you might appreciate the liquidity. 368 00:23:01,640 --> 00:23:06,320 Speaker 2: Based on what you're describing, you know, excess leverage risk 369 00:23:06,440 --> 00:23:11,399 Speaker 2: that companies can get some you know, relaxing of lending 370 00:23:11,440 --> 00:23:14,440 Speaker 2: standards perhaps. I mean that's kind of suggests a bit 371 00:23:14,480 --> 00:23:21,880 Speaker 2: of a late stage in the credit cycle in addition 372 00:23:21,920 --> 00:23:25,280 Speaker 2: to moral leverage and relaxed lending standards. Do you think 373 00:23:27,119 --> 00:23:31,040 Speaker 2: more aggressive accounting practices being an issue? I mean, we've 374 00:23:31,080 --> 00:23:33,440 Speaker 2: seen a couple of companies so far has been contained, 375 00:23:33,480 --> 00:23:37,960 Speaker 2: but small you know, smaller companies having to deal with 376 00:23:37,960 --> 00:23:41,280 Speaker 2: with accounting fraud and uh do you think that bears 377 00:23:41,480 --> 00:23:45,760 Speaker 2: the need to a question to have more due diligence 378 00:23:45,760 --> 00:23:48,760 Speaker 2: going forward? Do you think it's it's an isolated, isolated 379 00:23:48,800 --> 00:23:52,680 Speaker 2: examples or or could it be more widespread and how 380 00:23:52,720 --> 00:23:54,200 Speaker 2: to avoid those pitfalls? 381 00:23:54,960 --> 00:23:58,320 Speaker 3: I think I do think that they're contained. I don't 382 00:23:58,359 --> 00:24:01,520 Speaker 3: think it's a widespread issue, you know, I think it's 383 00:24:01,560 --> 00:24:04,480 Speaker 3: always proved in to look at who auditors are and 384 00:24:05,160 --> 00:24:10,400 Speaker 3: making sure that you know, ultimately that financials were reviewed 385 00:24:10,440 --> 00:24:14,080 Speaker 3: by qualified accountants. So yes, there have been a couple 386 00:24:14,080 --> 00:24:18,640 Speaker 3: of you know, examples of perhaps you know, for auditing 387 00:24:18,720 --> 00:24:21,240 Speaker 3: standards on a couple of these, but I don't see 388 00:24:21,240 --> 00:24:23,159 Speaker 3: that as a widespread issue in our market. 389 00:24:25,080 --> 00:24:27,800 Speaker 1: Going back to the race call you have, George, you know, 390 00:24:27,800 --> 00:24:32,680 Speaker 1: you're pretty hawkish rates staying up, presuming that that really 391 00:24:32,680 --> 00:24:34,800 Speaker 1: would put a bit of a damper on the whole 392 00:24:34,920 --> 00:24:37,760 Speaker 1: m and a story. A lot of the sponsors were 393 00:24:37,760 --> 00:24:39,919 Speaker 1: hoping to get cheaper money this year and start doing 394 00:24:40,000 --> 00:24:42,720 Speaker 1: some big deals. But you know, does that mean less 395 00:24:42,760 --> 00:24:45,040 Speaker 1: supply than terms of leverage finances year because of the 396 00:24:45,119 --> 00:24:46,560 Speaker 1: race staying up? 397 00:24:47,600 --> 00:24:50,400 Speaker 3: Well, I think we still have to recognize how much 398 00:24:50,600 --> 00:24:54,120 Speaker 3: we've come down from the peak. So you know, they 399 00:24:54,160 --> 00:24:58,320 Speaker 3: want they want twenty five basis points, so for we 400 00:24:58,440 --> 00:25:01,760 Speaker 3: had five and five in a core right, so we're 401 00:25:01,800 --> 00:25:05,679 Speaker 3: approaching we are actually kind of approaching the midpoint at 402 00:25:05,720 --> 00:25:10,280 Speaker 3: around three sixty five right now. So I do feel 403 00:25:10,359 --> 00:25:15,239 Speaker 3: that you'll, ultimately, I think the math still works. You know, 404 00:25:16,160 --> 00:25:19,600 Speaker 3: maybe multiples have to come down a little bit and 405 00:25:21,400 --> 00:25:26,040 Speaker 3: the bid ask, you know, gap if that narrows then 406 00:25:26,359 --> 00:25:28,879 Speaker 3: I think you can still make the math work. Given 407 00:25:29,480 --> 00:25:32,320 Speaker 3: spreads of Titan from a year ago. Rates have come 408 00:25:32,359 --> 00:25:34,320 Speaker 3: down from a year ago, so again it's not going 409 00:25:34,359 --> 00:25:38,159 Speaker 3: to be cheap money, but certainly cheaper than where we 410 00:25:38,160 --> 00:25:39,320 Speaker 3: were eighteen months ago. 411 00:25:40,240 --> 00:25:43,240 Speaker 1: So this kind of pens up demand for just deal making. 412 00:25:43,320 --> 00:25:44,800 Speaker 1: You think that's going to be enough to push people 413 00:25:44,840 --> 00:25:47,920 Speaker 1: through and that might create some net new supply for 414 00:25:48,080 --> 00:25:48,840 Speaker 1: leverage finance. 415 00:25:49,800 --> 00:25:52,399 Speaker 3: I do feel like net new supply will Yeah, we 416 00:25:53,160 --> 00:25:55,520 Speaker 3: will not be in a contracting market this year. I 417 00:25:55,520 --> 00:25:58,560 Speaker 3: think the market will expand, both high yield and loans. 418 00:26:00,119 --> 00:26:03,960 Speaker 3: You know, we we have seen fairly busy January already, 419 00:26:04,720 --> 00:26:09,320 Speaker 3: and I do feel that that that supply will will 420 00:26:09,359 --> 00:26:12,120 Speaker 3: continue to grow once companies kind of get you four 421 00:26:12,240 --> 00:26:13,240 Speaker 3: numbers out of the way. 422 00:26:14,200 --> 00:26:17,920 Speaker 1: So therefore, you know, to my proposition, which you can 423 00:26:17,960 --> 00:26:23,200 Speaker 1: feel free to totally reject and disagree with, that the net, 424 00:26:23,480 --> 00:26:25,440 Speaker 1: the lack of net supply and the access demand is 425 00:26:25,480 --> 00:26:28,159 Speaker 1: keeping spreads tight. If that reverses, the spreads go much wider. 426 00:26:28,440 --> 00:26:31,520 Speaker 3: I think we can back up call it twenty five 427 00:26:31,600 --> 00:26:35,720 Speaker 3: to thirty five if we see a real calendar with 428 00:26:36,000 --> 00:26:38,800 Speaker 3: you know, more M and A and more real new money. 429 00:26:40,240 --> 00:26:42,920 Speaker 3: You know, sixty is percent of the market right now, 430 00:26:42,960 --> 00:26:47,360 Speaker 3: and loans trading or above par. That's a high percentage. 431 00:26:47,400 --> 00:26:50,159 Speaker 3: So I think that number will come down if we 432 00:26:50,200 --> 00:26:54,080 Speaker 3: continue to see new issuings, and of course we have to, 433 00:26:54,160 --> 00:26:56,320 Speaker 3: you know, see where the macro is taking us again. 434 00:26:56,400 --> 00:27:02,679 Speaker 3: Days like today, I think we'll move, move spreads wider, 435 00:27:02,800 --> 00:27:07,280 Speaker 3: move prices lower. Question is, you know, is it sustainable? 436 00:27:07,400 --> 00:27:09,960 Speaker 3: So but you know that I think cash levels on 437 00:27:10,400 --> 00:27:14,680 Speaker 3: the investing side are are comfortable. I don't think anyone's 438 00:27:14,760 --> 00:27:17,760 Speaker 3: running super low cash. People are waiting for a calendar. 439 00:27:18,960 --> 00:27:23,119 Speaker 3: So there's there's dry powder in in the you know, 440 00:27:23,200 --> 00:27:24,440 Speaker 3: in the background. 441 00:27:25,000 --> 00:27:27,080 Speaker 1: So I should just also state for our listeners that 442 00:27:27,119 --> 00:27:29,040 Speaker 1: we are recording on January twentieth, and by the time 443 00:27:29,080 --> 00:27:31,360 Speaker 1: this comes out in two days, the world may them 444 00:27:31,480 --> 00:27:33,960 Speaker 1: be completely different. But I do want to ask you 445 00:27:34,000 --> 00:27:36,640 Speaker 1: also about the demand side, because when we were looking 446 00:27:36,640 --> 00:27:39,440 Speaker 1: at the cell side predictions for this year's spreads, most 447 00:27:39,440 --> 00:27:41,439 Speaker 1: of them were very, very bullish, you know, thinking that 448 00:27:41,440 --> 00:27:43,520 Speaker 1: spreads are going to be tightening. Most of it was 449 00:27:43,560 --> 00:27:46,959 Speaker 1: based on an assumption that this demand for yield just continues. 450 00:27:47,320 --> 00:27:49,240 Speaker 1: Some of that is going to be foreign. Today we're 451 00:27:49,240 --> 00:27:52,920 Speaker 1: hearing again as we did when the tariffs were announced 452 00:27:52,960 --> 00:27:55,560 Speaker 1: last April, that you should sell America. You know, America 453 00:27:55,640 --> 00:27:58,840 Speaker 1: is not good credit. And at the same time, Japan 454 00:27:59,000 --> 00:28:02,960 Speaker 1: yields shut up, so that must impact Asian demand for 455 00:28:03,000 --> 00:28:05,439 Speaker 1: some of this stuff. So in your view, George, do 456 00:28:05,440 --> 00:28:08,200 Speaker 1: you think that we will start to see a real 457 00:28:08,280 --> 00:28:11,080 Speaker 1: impact in terms of foreign demand for US credit. 458 00:28:12,960 --> 00:28:16,000 Speaker 3: I think it's a little early to say a lot. 459 00:28:16,119 --> 00:28:18,960 Speaker 3: A lot has been said over the last twenty four hours, 460 00:28:19,960 --> 00:28:24,760 Speaker 3: but you know, certainly Japan bears watching because Japan rates 461 00:28:24,800 --> 00:28:28,720 Speaker 3: going up impacts impacts rates globally as we're seeing today. 462 00:28:30,040 --> 00:28:35,119 Speaker 3: And the interesting aside there is, you know, will will 463 00:28:35,240 --> 00:28:39,000 Speaker 3: higher rates cause japan Japanese banks to pull back on 464 00:28:39,080 --> 00:28:43,720 Speaker 3: triple A CLO buying? Right? We won't really know the 465 00:28:43,760 --> 00:28:46,080 Speaker 3: answer to that until we get to April when their 466 00:28:46,120 --> 00:28:50,840 Speaker 3: new fiscal year starts, and you know, when budgets you know, 467 00:28:51,720 --> 00:28:55,120 Speaker 3: have been replenished, you know, where will that money be deployed. 468 00:28:55,760 --> 00:28:59,000 Speaker 3: Part of it will depend on you know, obviously local 469 00:29:01,080 --> 00:29:05,640 Speaker 3: local yields in Japan, but also where swap spreads are, 470 00:29:05,720 --> 00:29:11,120 Speaker 3: because if the cost to UH swap back into Japanese yen, 471 00:29:11,400 --> 00:29:14,680 Speaker 3: you know, taking dollar denominated investments and swapping them back 472 00:29:14,720 --> 00:29:22,000 Speaker 3: into Japanese local currency. If if that you know, cheapens up, 473 00:29:22,080 --> 00:29:26,000 Speaker 3: that can offset the higher yields. Conversely, if the cost 474 00:29:26,080 --> 00:29:32,080 Speaker 3: goes up, then the reason to invest domestically increases. 475 00:29:33,600 --> 00:29:36,280 Speaker 1: So on clos. You like clos A lot of people do. 476 00:29:37,480 --> 00:29:39,760 Speaker 1: But again, you know, there seems to be a bit 477 00:29:39,760 --> 00:29:43,400 Speaker 1: of disconnect between the stress in the leverage loans, the 478 00:29:43,760 --> 00:29:46,920 Speaker 1: you know, increase, the false lemies, all that stuff. At 479 00:29:46,920 --> 00:29:49,680 Speaker 1: the same time, everyone is piling into clos, not just 480 00:29:49,760 --> 00:29:51,480 Speaker 1: the Triple A, but we've had we've had people on 481 00:29:51,480 --> 00:29:55,600 Speaker 1: this show talk about double B COLO trunches. Do you 482 00:29:55,720 --> 00:29:58,080 Speaker 1: get the sense that maybe that trade is kind of 483 00:29:58,200 --> 00:30:00,680 Speaker 1: getting to its end? I mean, everybody's and everyone loves 484 00:30:00,680 --> 00:30:02,880 Speaker 1: the clos. What's the potential risk? Then? 485 00:30:04,480 --> 00:30:07,600 Speaker 3: I think on the you know, certainly the lower end 486 00:30:07,680 --> 00:30:10,720 Speaker 3: of the spectrum, whether it's double b's or the equity 487 00:30:10,800 --> 00:30:13,640 Speaker 3: that that's those are this you know, those are the 488 00:30:13,680 --> 00:30:19,160 Speaker 3: tranches that are more susceptible to credit losses. But again 489 00:30:19,200 --> 00:30:21,680 Speaker 3: that's kind of not that's not our base case this year. 490 00:30:21,720 --> 00:30:26,400 Speaker 3: So I do feel that, you know, the CLO CLO 491 00:30:26,600 --> 00:30:30,480 Speaker 3: debt and equity well in particular CLO debt tranches should 492 00:30:30,520 --> 00:30:36,120 Speaker 3: should have a very you know, good year yielding. You know, 493 00:30:36,120 --> 00:30:38,520 Speaker 3: if you look at the tranches across the board, whether 494 00:30:38,560 --> 00:30:42,840 Speaker 3: it's Triple A or double B, yielding significantly more than 495 00:30:43,080 --> 00:30:48,560 Speaker 3: comparable graded credit. So I think the demand from whether 496 00:30:48,560 --> 00:30:53,760 Speaker 3: it's investment grade or high yield players or you know, 497 00:30:53,960 --> 00:30:58,040 Speaker 3: just mom and pop in even in triple A, there's 498 00:30:58,080 --> 00:31:01,680 Speaker 3: always this quest for yield, and and I think you know, 499 00:31:01,760 --> 00:31:08,280 Speaker 3: triple a's in particular have demonstrated relatively stable you know navs. 500 00:31:08,360 --> 00:31:11,400 Speaker 3: We've never seen a triple A get dented and two 501 00:31:11,480 --> 00:31:15,320 Speaker 3: thousand and eight would be the best example for that. 502 00:31:15,440 --> 00:31:18,040 Speaker 3: We've never even seen a Double A get dented. So 503 00:31:19,280 --> 00:31:22,680 Speaker 3: you know, we've seen c MBS triple a's get hit 504 00:31:22,720 --> 00:31:25,240 Speaker 3: as a result of the you know, the commercial real estate, 505 00:31:25,840 --> 00:31:30,560 Speaker 3: you know, valuations go down. So so I do feel 506 00:31:30,600 --> 00:31:34,680 Speaker 3: that the the acid class is battle tested. We've seen 507 00:31:34,720 --> 00:31:37,479 Speaker 3: it go through multiple cycles. It's it has held up 508 00:31:37,560 --> 00:31:41,840 Speaker 3: extremely well. You know, you could have volatility in the 509 00:31:41,960 --> 00:31:45,040 Speaker 3: value of the mark on a double B because that 510 00:31:45,120 --> 00:31:50,720 Speaker 3: will go down on a day like today, but historically speaking, 511 00:31:51,040 --> 00:31:55,720 Speaker 3: that you know, again absent very high default rates and 512 00:31:55,920 --> 00:32:01,120 Speaker 3: tour recoveries. You still have some nice subordinate below that 513 00:32:01,240 --> 00:32:01,720 Speaker 3: as well. 514 00:32:04,160 --> 00:32:07,440 Speaker 1: And then on the lemes that you mentioned earlier, that 515 00:32:07,480 --> 00:32:10,040 Speaker 1: has also been a big theme for us. We've talked 516 00:32:10,040 --> 00:32:12,440 Speaker 1: about it a lot. It looks pretty much like a 517 00:32:12,520 --> 00:32:16,760 Speaker 1: default in most cases, it's much more aggressive. It's spreading 518 00:32:16,800 --> 00:32:19,720 Speaker 1: to Europe. It's you know that the lawyers love it. 519 00:32:20,160 --> 00:32:23,080 Speaker 1: How do you protect yourself there though? From from losses? 520 00:32:24,000 --> 00:32:27,320 Speaker 1: You know, if you are suddenly surprised by a transaction 521 00:32:27,440 --> 00:32:29,680 Speaker 1: like that, I. 522 00:32:29,600 --> 00:32:33,520 Speaker 3: Think the warning signs would be evident before the lem 523 00:32:34,440 --> 00:32:40,000 Speaker 3: they're obviously the first cut is bad earning, second cut 524 00:32:40,160 --> 00:32:44,480 Speaker 3: is trading levels start. Let's say go below ninety. You 525 00:32:44,720 --> 00:32:47,000 Speaker 3: have to look at who the sponsor is on the deal. 526 00:32:47,160 --> 00:32:50,280 Speaker 3: I think there are some sponsors that haven't done any 527 00:32:50,320 --> 00:32:54,680 Speaker 3: of them, they've been supportive of their transactions, they've put 528 00:32:54,720 --> 00:32:59,239 Speaker 3: equity in, and other sponsors that have done multiple me. 529 00:32:59,480 --> 00:33:03,400 Speaker 3: So I think it's it's pretty easy to make to 530 00:33:03,520 --> 00:33:11,440 Speaker 3: make your list, and you know who is playing well 531 00:33:11,480 --> 00:33:16,440 Speaker 3: in the sandbox and who isn't. So by the time 532 00:33:16,560 --> 00:33:20,600 Speaker 3: an LME gets announced, it's usually not a surprise, or 533 00:33:20,640 --> 00:33:24,160 Speaker 3: at least not a big surprise. So I think it's 534 00:33:24,200 --> 00:33:30,320 Speaker 3: important to recognize you know, fundamental deterioration in credit early 535 00:33:30,680 --> 00:33:34,240 Speaker 3: and cut your ties to that credit and move on. 536 00:33:35,640 --> 00:33:40,200 Speaker 2: Yeah, we're not seeing a lot of activity on the 537 00:33:40,200 --> 00:33:44,720 Speaker 2: bondholder site or a lot of pressure to try to 538 00:33:44,800 --> 00:33:48,479 Speaker 2: impose stronger covenant. I guess on the contrary, I mean 539 00:33:48,520 --> 00:33:54,800 Speaker 2: we periodically hear bondholders should or credit investors should unite 540 00:33:54,800 --> 00:34:01,560 Speaker 2: and maybe try to force stronger protection packages. What's your views? 541 00:34:01,560 --> 00:34:05,000 Speaker 2: What do you think? Do you think we we will 542 00:34:05,280 --> 00:34:08,680 Speaker 2: have to see uh, i know, the deterioration and more 543 00:34:08,680 --> 00:34:11,759 Speaker 2: default for for maybe the investment community to try to 544 00:34:13,080 --> 00:34:15,680 Speaker 2: bring the balance of power a little bit to their 545 00:34:16,239 --> 00:34:18,080 Speaker 2: to their side. 546 00:34:18,920 --> 00:34:21,759 Speaker 3: I think it will depend on on the supply and 547 00:34:21,880 --> 00:34:28,839 Speaker 3: demand equation. If if demand is outstripping supply, I think 548 00:34:28,880 --> 00:34:32,840 Speaker 3: it's unlikely that the you know, the pendulum will swing 549 00:34:32,960 --> 00:34:37,319 Speaker 3: to our favor. I think if markets start to normalize 550 00:34:37,360 --> 00:34:40,440 Speaker 3: and there's there's more you know, supply out there, then 551 00:34:40,680 --> 00:34:44,360 Speaker 3: then we can absorb. Then the market can get a 552 00:34:44,400 --> 00:34:48,279 Speaker 3: little more selective and a little more forceful. And what 553 00:34:48,360 --> 00:34:53,520 Speaker 3: it's looking to do two to make sure that we've 554 00:34:53,560 --> 00:34:58,040 Speaker 3: got more you know, more protections and more so we 555 00:34:58,080 --> 00:35:02,680 Speaker 3: can husband cash and and and you know, make sure 556 00:35:02,719 --> 00:35:04,760 Speaker 3: there's less less leagage in deals. 557 00:35:06,239 --> 00:35:07,839 Speaker 1: What do you think might cause that? Though, because we've 558 00:35:07,840 --> 00:35:10,480 Speaker 1: seen so many events that you know, typically in a 559 00:35:10,640 --> 00:35:15,759 Speaker 1: in a kind of risk assets contexts would have reversed 560 00:35:16,040 --> 00:35:19,120 Speaker 1: the flow and also pushed spreads a lot wider bit. 561 00:35:19,239 --> 00:35:20,600 Speaker 1: But it just never happens. 562 00:35:22,440 --> 00:35:27,399 Speaker 3: It's usually a you know, a sustained sell off, right, 563 00:35:27,400 --> 00:35:28,040 Speaker 3: because then. 564 00:35:28,320 --> 00:35:31,320 Speaker 1: Is it triggered by is it only triggered by economic downturn? 565 00:35:31,400 --> 00:35:33,800 Speaker 1: And in which case no one kind of expects that 566 00:35:33,880 --> 00:35:34,640 Speaker 1: at the moment. 567 00:35:35,200 --> 00:35:39,120 Speaker 3: Right, it's it's unlikely if if I'm being asked, do 568 00:35:39,280 --> 00:35:40,600 Speaker 3: I think it happens this year? 569 00:35:40,719 --> 00:35:40,759 Speaker 1: No? 570 00:35:40,880 --> 00:35:46,279 Speaker 3: I don't. I think you know, we've seen some terms 571 00:35:46,400 --> 00:35:49,560 Speaker 3: that have been inserted that the market has pushed back 572 00:35:50,320 --> 00:35:54,640 Speaker 3: well against. For example, something called high water EBITDA, so 573 00:35:54,760 --> 00:36:00,399 Speaker 3: that when you have when you're testing a particular covenant verage, 574 00:36:00,440 --> 00:36:03,520 Speaker 3: interest coverage, what have you, it won't be on your 575 00:36:03,600 --> 00:36:08,680 Speaker 3: last twelve months EPA DA, it'll be on your your 576 00:36:09,200 --> 00:36:12,040 Speaker 3: best twelve months of EPIDA, even if that was two 577 00:36:12,120 --> 00:36:16,719 Speaker 3: years ago. So that you know, that was one where they, 578 00:36:17,120 --> 00:36:21,000 Speaker 3: you know, try to insert that, and I think we've 579 00:36:21,000 --> 00:36:23,000 Speaker 3: been you know, there might be one or two deals 580 00:36:23,000 --> 00:36:25,319 Speaker 3: out there that have it, but we've we've pushed back 581 00:36:25,360 --> 00:36:30,880 Speaker 3: on that, I think successfully because that obviously is a stretch. 582 00:36:31,160 --> 00:36:36,759 Speaker 3: So but yeah, to your point, it is something that 583 00:36:38,680 --> 00:36:45,160 Speaker 3: is unlikely to change unless there's you know, significant sell 584 00:36:45,200 --> 00:36:46,319 Speaker 3: off in the market. 585 00:36:47,120 --> 00:36:49,960 Speaker 1: People used to talk about cycles a lot in credit 586 00:36:50,840 --> 00:36:52,839 Speaker 1: and you know, you've been doing this for a while 587 00:36:52,840 --> 00:36:55,160 Speaker 1: as we as we've said, where are we in the 588 00:36:55,239 --> 00:36:57,480 Speaker 1: cycle if such a thing, as such a concept is 589 00:36:57,520 --> 00:36:58,799 Speaker 1: even relevant nowadays. 590 00:36:59,080 --> 00:37:02,680 Speaker 3: Seven seventh thing to bring out the sports analogies. 591 00:37:02,200 --> 00:37:04,160 Speaker 1: But it seems like seventhing that just goes on forever. 592 00:37:04,200 --> 00:37:06,600 Speaker 1: If you're you know, based on your economic outlook. 593 00:37:06,200 --> 00:37:08,560 Speaker 3: And it's a long inning, there's a lot of runs 594 00:37:08,640 --> 00:37:13,959 Speaker 3: being scored, I would say, you know, I would say 595 00:37:14,040 --> 00:37:18,919 Speaker 3: that this year is is not the year that will 596 00:37:19,040 --> 00:37:22,040 Speaker 3: likely see a downturn, just because of all the stimulus 597 00:37:22,080 --> 00:37:25,560 Speaker 3: that's been put into the market. Next year, obviously we 598 00:37:25,600 --> 00:37:29,120 Speaker 3: don't know what Congress will look like. So if if 599 00:37:29,160 --> 00:37:34,200 Speaker 3: there's you know, if there's a more divided government last 600 00:37:34,480 --> 00:37:38,600 Speaker 3: next year, than chances are less gets done, if that's 601 00:37:38,640 --> 00:37:44,640 Speaker 3: even possible, and so you know, you might you might 602 00:37:44,760 --> 00:37:47,359 Speaker 3: have you know, you might be in the ninth inning 603 00:37:47,440 --> 00:37:52,400 Speaker 3: next year, right, depending on on how much both aisles 604 00:37:52,480 --> 00:37:55,560 Speaker 3: want to work with each other. So so there there 605 00:37:55,560 --> 00:37:59,040 Speaker 3: are some uncertainties as we as we you know, as 606 00:37:59,040 --> 00:38:01,720 Speaker 3: we head into to the fourth quarter this year because 607 00:38:01,760 --> 00:38:06,279 Speaker 3: of elections and and what what that'll mean for you know, 608 00:38:06,320 --> 00:38:10,280 Speaker 3: for the economy in twenty seven. But as we focus 609 00:38:10,440 --> 00:38:13,880 Speaker 3: on you know, a brand new year now and looking 610 00:38:14,080 --> 00:38:17,600 Speaker 3: at the next twelve months, I think, you know, we're 611 00:38:17,600 --> 00:38:21,920 Speaker 3: looking at an economy that you know, is not not perfect, 612 00:38:22,120 --> 00:38:26,160 Speaker 3: don't get me wrong, but it is you know, we 613 00:38:26,400 --> 00:38:30,040 Speaker 3: it is doing well. Companies are doing well, companies are 614 00:38:30,080 --> 00:38:35,280 Speaker 3: hitting their numbers, and you know, I think there's enough 615 00:38:35,400 --> 00:38:39,400 Speaker 3: momentum in this market for you know, again decent returns 616 00:38:39,440 --> 00:38:39,839 Speaker 3: this year. 617 00:38:40,719 --> 00:38:42,680 Speaker 1: But at the same time, as we've talked about Ellion 618 00:38:42,680 --> 00:38:44,040 Speaker 1: and show, there are going to be these defaults. You 619 00:38:44,040 --> 00:38:45,839 Speaker 1: said it's going to stay at the same level as 620 00:38:45,840 --> 00:38:48,239 Speaker 1: this year, which you know, there are different estimates. I 621 00:38:48,280 --> 00:38:51,279 Speaker 1: guess four percent is around the level that most people 622 00:38:51,280 --> 00:38:53,520 Speaker 1: are kind of coalesced on in terms of you know 623 00:38:53,560 --> 00:38:56,759 Speaker 1: what what what we're running at. That's that's just a 624 00:38:57,280 --> 00:38:59,160 Speaker 1: you know, relatively small portion of the market, but you 625 00:38:59,160 --> 00:39:01,920 Speaker 1: don't think it's big enough to cause any contagion already 626 00:39:02,239 --> 00:39:05,640 Speaker 1: worry about credit more broadly in in in America. 627 00:39:06,280 --> 00:39:09,319 Speaker 3: I don't because we you know, we hit we hit 628 00:39:09,400 --> 00:39:15,440 Speaker 3: four percent last year. It was it was relatively concentrated 629 00:39:15,680 --> 00:39:21,680 Speaker 3: right kind of three sectors. And I think that if 630 00:39:21,719 --> 00:39:25,560 Speaker 3: you look at the the uber distressed part of the market, 631 00:39:25,640 --> 00:39:29,720 Speaker 3: let's call that sub sixty you know, lunch trading below sixty. 632 00:39:32,400 --> 00:39:35,680 Speaker 3: There there's nothing in in that cohort that I would 633 00:39:35,719 --> 00:39:41,759 Speaker 3: pull surprising should they file. And you know, at the 634 00:39:41,800 --> 00:39:44,719 Speaker 3: same time, we've seen some names that you might have 635 00:39:45,080 --> 00:39:49,840 Speaker 3: counted towards that that you know, seemingly pulled the rabbits 636 00:39:49,840 --> 00:39:54,440 Speaker 3: out of the proverbial hat, most recently a fiber provider 637 00:39:54,560 --> 00:39:58,080 Speaker 3: that announced the JV with Google to build out their 638 00:39:58,080 --> 00:40:02,439 Speaker 3: fiber assets. So I think many probably had that one 639 00:40:02,560 --> 00:40:09,680 Speaker 3: circled for for Chapter eleven this year, and it's probably unlikely. So, 640 00:40:11,719 --> 00:40:16,000 Speaker 3: you know, I do feel that, you know, the even 641 00:40:16,040 --> 00:40:19,920 Speaker 3: the lower quality part of the market, if if you're 642 00:40:19,960 --> 00:40:24,560 Speaker 3: at least performing, okay, you're still an acquisition target. And 643 00:40:24,560 --> 00:40:28,319 Speaker 3: and sponsors have been very good at at you know, 644 00:40:28,440 --> 00:40:30,760 Speaker 3: finding buyers for their for their assets. 645 00:40:31,280 --> 00:40:33,560 Speaker 1: Where is the best value Jorgian? You know, what's your edge. 646 00:40:33,640 --> 00:40:36,840 Speaker 3: Yeah, we we tried to focus on, you know, names 647 00:40:36,880 --> 00:40:41,640 Speaker 3: that might you know that might be in sectors that 648 00:40:42,120 --> 00:40:46,920 Speaker 3: are not super in love. So I think energy for 649 00:40:47,000 --> 00:40:50,440 Speaker 3: a long time, in the loan space in particular, was 650 00:40:50,560 --> 00:40:55,520 Speaker 3: unlocked following what happened in fifteen and fifteen into sixteen, 651 00:40:56,360 --> 00:41:00,600 Speaker 3: and you know that there were great opportunities there over 652 00:41:00,640 --> 00:41:03,800 Speaker 3: the years. We saw that again with aerospace and defense 653 00:41:03,880 --> 00:41:08,600 Speaker 3: after you know, after COVID, and you know, more recently 654 00:41:08,760 --> 00:41:12,080 Speaker 3: we we've found it. We have found some good opportunities 655 00:41:12,080 --> 00:41:15,879 Speaker 3: in the media space, which again is being written off, 656 00:41:17,320 --> 00:41:20,600 Speaker 3: you know wholeheartedly, where there are always a few good 657 00:41:20,719 --> 00:41:23,799 Speaker 3: names in every sector, you know, So I think it's 658 00:41:23,840 --> 00:41:28,080 Speaker 3: it's always that's where you're going to find value. It's 659 00:41:28,120 --> 00:41:31,160 Speaker 3: if you try and find value a name that just 660 00:41:31,320 --> 00:41:35,200 Speaker 3: everyone loves it, it's fine, you'll clip your coupon. But 661 00:41:35,320 --> 00:41:39,239 Speaker 3: you know, we have found some interesting opportunities in telecom, 662 00:41:39,440 --> 00:41:46,080 Speaker 3: in in media, energy, aerospace that have have done well, 663 00:41:46,080 --> 00:41:47,440 Speaker 3: and utilities as well. 664 00:41:48,200 --> 00:41:49,640 Speaker 1: So looking at the credit market right now, is there 665 00:41:49,640 --> 00:41:53,480 Speaker 1: anything particularly surprises you based on your experience, I mean 666 00:41:53,840 --> 00:41:58,439 Speaker 1: the just new stuff that's happening, or the disconnect between 667 00:41:58,480 --> 00:42:00,799 Speaker 1: fundamentals and technicals or what is anything that you think 668 00:42:00,920 --> 00:42:03,000 Speaker 1: jumps out as a well, I've never seen that. 669 00:42:02,960 --> 00:42:07,680 Speaker 3: Before, maybe not as far as I haven't seen that before, 670 00:42:07,760 --> 00:42:12,440 Speaker 3: but I do think that, you know, we we would 671 00:42:12,520 --> 00:42:16,880 Speaker 3: like to see a little more rational new issue pricing, 672 00:42:17,239 --> 00:42:20,799 Speaker 3: both loans and high yield. Again, you know we, I 673 00:42:20,840 --> 00:42:23,760 Speaker 3: think it's just a function of just too much demand 674 00:42:23,920 --> 00:42:28,360 Speaker 3: chasing too little supply. So you know, we're trying to 675 00:42:28,400 --> 00:42:33,080 Speaker 3: restore the the balance of power, if you will. But 676 00:42:33,080 --> 00:42:35,640 Speaker 3: but you know, let's let's keep in mind too that 677 00:42:35,880 --> 00:42:39,360 Speaker 3: overall yields, let's forget spreads for a second, that yields 678 00:42:39,440 --> 00:42:42,960 Speaker 3: are still attractive. So a couple of years ago, if 679 00:42:43,760 --> 00:42:48,279 Speaker 3: you couldn't earn anything, you were two three percent, and 680 00:42:48,400 --> 00:42:53,359 Speaker 3: so we're at least now in a range where mid 681 00:42:53,400 --> 00:42:56,759 Speaker 3: single digits, let's call it for for high yield and 682 00:42:56,880 --> 00:43:01,600 Speaker 3: loans that I think, just an outright basis, it's still 683 00:43:01,680 --> 00:43:07,400 Speaker 3: pretty attractive relative to you know, the the zerup is, if. 684 00:43:07,280 --> 00:43:11,560 Speaker 1: You will, great stuff, George Goodelias with Psych's Investment Advisors. 685 00:43:11,640 --> 00:43:13,279 Speaker 1: It's been a real pleasure having you on the credit edge. 686 00:43:13,320 --> 00:43:17,839 Speaker 1: Many thanks, thank you, James appreciate it, and of course 687 00:43:17,880 --> 00:43:20,800 Speaker 1: I'm very grateful to Johann Eve Coupan the Bloomberg Intelligence. 688 00:43:20,800 --> 00:43:22,560 Speaker 1: Thanks so much for joining us today. Thank you very 689 00:43:22,640 --> 00:43:25,799 Speaker 1: much for even more credit market analysis and insight. Read 690 00:43:25,800 --> 00:43:28,640 Speaker 1: all of Johnny Coupan's great work on the Bloomberg Terminal. 691 00:43:28,719 --> 00:43:31,480 Speaker 1: Bloomberg Intelligence is part of our research department, with five 692 00:43:31,560 --> 00:43:35,520 Speaker 1: hundred analysts and strategists working across all markets. Coverage includes 693 00:43:35,520 --> 00:43:38,200 Speaker 1: over two thousand equities and credits and outlooks on more 694 00:43:38,200 --> 00:43:42,719 Speaker 1: than ninety industries and one hundred market indices, currencies and commodities. 695 00:43:43,320 --> 00:43:45,600 Speaker 1: Please do subscribe to the Credit Edge wherever you get 696 00:43:45,640 --> 00:43:48,799 Speaker 1: your podcasts. We're on Apple, Spotify, and all other good 697 00:43:48,840 --> 00:43:53,480 Speaker 1: podcast providers, including the Bloomberg Terminal at bpod Go. Give 698 00:43:53,520 --> 00:43:56,640 Speaker 1: us a review, tell your friends, or email me directly 699 00:43:56,760 --> 00:44:01,160 Speaker 1: at jcromb eight at Bloomberg dot net. I'm James Crombie. 700 00:44:01,200 --> 00:44:03,520 Speaker 1: It's been a pleasure having you join us again next 701 00:44:03,600 --> 00:44:05,120 Speaker 1: week on the Credit Edge