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Speaker 1: Hello, and welcome to the Credit Edge, a weekly markets podcast.

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Speaker 1: My name is James Crombie. I'm a senior editor at Bloomberg.

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Speaker 1: This week, we're very pleased to welcome Vishy Turripeteur, chief

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Speaker 1: fixed income strategist at Morgan Sanley. How are you, Vichy?

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Speaker 2: Hi, James, thanks for having me.

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Speaker 1: Thank you so much for joining us today. We're excited

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Speaker 1: to dig into your market views and the outlook. Also

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Speaker 1: delighted to welcome back Spencer Cutter with Bloomberg Intelligence. Great

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Speaker 1: to see you again, Spencer. So just to set the

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Speaker 1: scene a little here, credit markets are coming under pressure

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Speaker 1: as government yields keep going up, but barnes spreads are

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Speaker 1: still very tight. You're not getting very much compensation for

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Speaker 1: the risk of default or downgrade. Data on the US

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Speaker 1: economy is coming in hot, pushing treasury yields higher, making

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Speaker 1: corporate barnes look more attractive than they have for years.

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Speaker 1: So demand is high. There are some signs of froth

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Speaker 1: in the marketplace, which I expect we'll be talking about

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Speaker 1: a bit later. At the same time, we're seeing record

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Speaker 1: levels of bond and loan issuance. US companies have a

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Speaker 1: lot of refinancing to do, and they're taking advantage of

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Speaker 1: a window to raise debt. There's also a boom in

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Speaker 1: private markets, asset based finance and structured debt. Treasurers and

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Speaker 1: CFOs have a lot of options open to them. The

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Speaker 1: consensus on credit for this year remains pretty bullish, founded

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Speaker 1: on a belief that the US economy will avoid recession.

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Speaker 1: Most companies can afford to pay the higher current borrowing

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Speaker 1: costs as earnings remain strong. Fundamentally, companies appear to be

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Speaker 1: in a good place. On the other hand, though, there

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Speaker 1: is also a lot to worry about, from commercial real

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Speaker 1: estate to war, geopolitics and elections. Plus inflation definitely hasn't

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Speaker 1: gone away. That may mean no rate cuts at all

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Speaker 1: this year, and total returns, at least on the barn

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Speaker 1: side have turned negative. So Bishi, let's start with you.

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Speaker 1: What do you make of all this? Is it really

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Speaker 1: the year of the bond or the golden age of credit?

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Speaker 1: As a lot of people on this show keep telling us,

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Speaker 1: what's your view?

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Speaker 2: I think we are very constructive on credit. I think

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Speaker 2: it's a very challenging environment for sure, As you described,

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Speaker 2: there are lots of uncertainties about you know, when do

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Speaker 2: the rate cut survive, how many date cuts we would get,

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Speaker 2: and how long the policy is in continue, and how

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Speaker 2: does the economy and inflation growth, et cetera pan out.

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Speaker 2: I think why credit stands out in a very positive

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Speaker 2: manner here. I think first first and foremost is that

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Speaker 2: if we're thinking about an economy that is ruling that's

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Speaker 2: stronger than what we anticipated, that is good for company earnings,

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Speaker 2: and in turn, it's good for the fundamentals of credit markets.

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Speaker 2: Number two, companies have over the last twenty one we

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Speaker 2: should a lot of debt, particularly fixedates. We should a

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Speaker 2: lot of debt both in investment mad and in high

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Speaker 2: yel so the mere term refinancing needs are fairly limited.

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Speaker 2: And the in the last year or so, there's been

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Speaker 2: considerable work done in the markets to chop down the

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Speaker 2: so called maturity walks. So maturity challenges today in the

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Speaker 2: credit markets, in the in the corporate credit markets don't

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Speaker 2: appear that uh demanding at this point. Very important is

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Speaker 2: that the credit curve is not inverted. You know, if

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Speaker 2: you look at the treasury curve, the inversion in the

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Speaker 2: treasury curve makes it a negative carry track. Even if

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Speaker 2: you have the expectation that the longer term yields or

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Speaker 2: or not insane? Can you expect longer term meals to

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Speaker 2: go down? There is you're taking a risk of a

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Speaker 2: negative carry as big as long as the front end

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Speaker 2: is meaningfully higher than the longer end. In credit, on

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Speaker 2: the other hand, is a positive carry trick meaning credit

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Speaker 2: curve is positively slowed. Scary and rule that works very

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Speaker 2: much for credit doesn't quite work for the treasury market

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Speaker 2: at this point. So that puts credit overall in a

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Speaker 2: pretty good place. Can you add on top of this

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Speaker 2: the conditions for you know, the capital markets are wide open,

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Speaker 2: the financial conditions are there with the if there are

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Speaker 2: as you said earlier, there are if a company wants

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Speaker 2: to borrow, there are multiple avenues for companies to borrow.

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Speaker 2: All of this boats really well for credit investors at

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Speaker 2: this point.

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Speaker 1: So to talk about rates, So what's your current view?

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Speaker 1: We have everything from you know, three cuts this year

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Speaker 1: to actually an increase at some point and not not

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Speaker 1: not to distant future. What's your what's your view rates?

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Speaker 2: Our view on rates is that in the course of

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Speaker 2: twenty twenty four, we expect to see three our base cases,

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Speaker 2: we expect to see three rate cups starting in July

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Speaker 2: and skipping September and having another twenty five basic point

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Speaker 2: raid cut in November as well as in this so

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Speaker 2: three rate cuts this year, three rate cuts in twenty

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Speaker 2: twenty five. As a as a credit investor, the thing

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Speaker 2: that matters most is that the next FED policy action

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Speaker 2: is not a hike, and we don't. We think the

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Speaker 2: bar for a hike is very high. As long as

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Speaker 2: the next move is not, I think credit will do

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Speaker 2: well even if there are the you know, the rate

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Speaker 2: cuts are fewer and arrive later. Credit will do well

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Speaker 2: as long as the next move again is not a hike.

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Speaker 1: And to get those rate cuts, you expect the economy

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Speaker 1: to slow significantly such that the FED fields that it

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Speaker 1: needs to ease a little bit.

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Speaker 2: We expect some slowing. We know. We have revised how

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Speaker 2: much flowing from our year ahead outlook that we published

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Speaker 2: in November. In November, we were expecting that the twenty

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Speaker 2: twenty four see GDP glows in the US. Of the

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Speaker 2: one point six percent that we have now divides it

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Speaker 2: up to two point three percent. It is still a

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Speaker 2: slower growth from the taste of growth in twenty three,

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Speaker 2: but not as much as much as slower as we

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Speaker 2: had thought earlier. So good strong growth is good for credit.

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Speaker 2: Let's not forget that strong growth is good for credit.

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Speaker 3: Hey, this Spencer Cutter call from Bloomberg Intelligence. On that note,

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Speaker 3: quick question for you, I guess what do you think

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Speaker 3: when it comes to rate cuts from the FED? What

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Speaker 3: is more important is that inflation or their economic growth?

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Speaker 3: Because I'm sitting here thinking, you know, roll the calendar

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Speaker 3: back to December, and everybody expected the FED would have

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Speaker 3: already cut rates at least once, if not twice, by now.

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Speaker 3: But here we are and they haven't cut And there's

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Speaker 3: even some people saying that think the next move now

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Speaker 3: could be a rate hike, And that's largely because inflation

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Speaker 3: data is coming in stronger than people had thought it

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Speaker 3: might at this point. So I guess, if the economy

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Speaker 3: is slowing down but inflation is still three four or

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Speaker 3: five percent, what does the FED do?

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Speaker 2: Well? The first thing is that we don't expect inflation

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Speaker 2: to be three four five percent. We expect inflation too,

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Speaker 2: to come down to two six percent by the end

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Speaker 2: of the year. And in that world where and we

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Speaker 2: think predominantly to come down from not only goods related

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Speaker 2: deflation or this inflation. We expect to see some slowing

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Speaker 2: of the services led inflation as well. So the path

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Speaker 2: to that desilvation inflation is going to be bumpy, and

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Speaker 2: it's been perhaps bumpier than what we had expected it

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Speaker 2: to be. But the trajectory, as long as the trajectory

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Speaker 2: of inflation is downward, we expect that the FED will

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Speaker 2: will be cutting because the issue of how long does

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Speaker 2: the economy need to continue to be under continued molecule

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Speaker 2: thing that will be the question that the FED has

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Speaker 2: to content with. And we would say that, you know, uh,

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Speaker 2: the economy turns out as we are, as we are

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Speaker 2: expecting it to, we will see inflation coming down. Where

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Speaker 2: we would be wrong is that this path changes and

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Speaker 2: we end up having a reaccelevation of the pace of

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Speaker 2: inflation and we do get to three five percent as

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Speaker 2: you as you contended just now, that is definitely a challenge.

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Speaker 2: I don't expect FED to be cutting under those worlds.

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Speaker 2: In that world and I would also say that the

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Speaker 2: bar for the next move to be hyped, in our opinion,

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Speaker 2: is very high, very high from being achieved. So maybe

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Speaker 2: the Federal beyond hold for longer is a greater likelihood

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Speaker 2: than the next move being the hype.

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Speaker 1: So what does that there's a credit spread specially, I mean,

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Speaker 1: they've been very very tight for the last few months.

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Speaker 1: They've widened out over the last few days. But if

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Speaker 1: I look at your bull came in the most recent research,

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Speaker 1: that would suggests, you know, the spreads are going to

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Speaker 1: go below eighty for ig, which is very very tight

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Speaker 1: in history.

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Speaker 2: It is tight, but it's you know, historically speaking, and

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Speaker 2: when we do expect that under if all of these conditions,

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Speaker 2: the case for our bullcase to pan out as you

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Speaker 2: as we laid out is not outside the realm of possibilities.

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Speaker 2: That's quite possible. And while spreads are tight historically speaking,

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Speaker 2: they are not at the tightest levels. You know, while

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Speaker 2: you look at the last thirty years of CREATE spread data,

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Speaker 2: the types for US investment need credit in the mid nineties,

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Speaker 2: ninety six, ninety seven times by time train fifty eight

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Speaker 2: basis points. I'm not suggesting that you go to fifty eight,

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Speaker 2: but I just want to highlight that why credit spreads

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Speaker 2: are tight relative to the recent history, they are not

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Speaker 2: at the tightest relative to a longer term history.

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Speaker 1: And they're also very tight on the high yield side.

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Speaker 1: I mean that sort of begs the question if you

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Speaker 1: look at spreads sort of compensation for on the IG

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Speaker 1: side downgrade risk and on the high yield side to

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Speaker 1: fault risk, are you getting compensated enough? Do you think

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Speaker 1: for the for all the risks that we've sort of outlined,

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Speaker 1: which is the.

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Speaker 2: Better compensation in the high healed space is in loans

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Speaker 2: as opposed to bonce, So leverage loans versus high ed

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Speaker 2: bonds is we think is a better place to be.

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Speaker 2: You know, remember, leverage loans are floating weight instruments, and

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Speaker 2: because they're floating rate, the effect of the five hundred

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Speaker 2: and fifty basis points of monetary policy tightening has already

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Speaker 2: been felt in the in the leveraged loans space, and

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Speaker 2: there is a clearly what I would call a positive

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Speaker 2: survivorship bias in leverage loans. In other words, if a

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Speaker 2: company has endured fie hundred and fifty business points of tightening,

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Speaker 2: it is quite likely that the company is going to endure,

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Speaker 2: especially if the next policy move is not that of

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Speaker 2: a tightening and more that of a easing. Under that world,

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Speaker 2: we think that the you know, if you put it

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Speaker 2: in that that in that perspective, the challenges in the

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Speaker 2: high yelled bond market are greater because high yell bond

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Speaker 2: markets have not high companies that are dependent on fixed

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Speaker 2: rate high yell bond financing have not, for the most part,

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Speaker 2: experienced this effect of higher rates. There they is shued

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Speaker 2: a lot of debt in twenty twenty, twenty twenty, and

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Speaker 2: twenty twenty one, and they have not had to issue

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Speaker 2: much debt or they have not. Their coupons have significantly

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Speaker 2: below today. So if they were to refinance in twenty

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Speaker 2: six or twenty seven or twenty five, twenty six, twenty seven,

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Speaker 2: the sticker shock or high healed bonds would be meaningful.

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Speaker 2: On the other hand, for levels loans the fund the

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Speaker 2: next move is a cut in you know will and

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Speaker 2: expect to see there the pressure on interest coverage that

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Speaker 2: we have seen start to eaither bet and if you've

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Speaker 2: seen the downraade cycle, the downtlaates cycle peat in the

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Speaker 2: middle of last year. So we now expect that the

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Speaker 2: you know we've been seeing for a couple of quarters

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Speaker 2: where the upgrade downlade ratio has moved in favor of

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Speaker 2: upgrades and leverage loans. You add to that that the

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Speaker 2: robust return of the clo market. The structured credit market

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Speaker 2: is an important buyer base in leveraged loans. A robust

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Speaker 2: new issue market in the loans is most very positively

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Speaker 2: for the levis. So within the higher space, we like

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Speaker 2: leverage loans much more than we.

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Speaker 1: Like high box and clearly, as you said, they've outperformed

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Speaker 1: bonds over the last certainly year today and in over

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Speaker 1: the last year, perhaps because they are floating and rates

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Speaker 1: have just kept going up. But at the same time,

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Speaker 1: you know, if you look at the racing agencies outlooks

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Speaker 1: for defaults, the loan default rate expectation is much higher. Also,

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Speaker 1: the recovery rate is much lower than it has been

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Speaker 1: compared to history. Are we not kind of underplaying the

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Speaker 1: risks a bit and loans?

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Speaker 2: Well, I don't think so. I think the recovery dates

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Speaker 2: will be much lower. In our expectations, recovery rates will

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Speaker 2: be close to fifty percent compared to the long term

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Speaker 2: recovery dates that you've seen of over seventy percent. So

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Speaker 2: our calculations already incorporate meaningfully lower recovery dates in the

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Speaker 2: cycle compared to the past cycles. The second we think

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Speaker 2: that downrates and defaults are on the way down. The

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Speaker 2: peak in downrates in the loan space, downraates, particularly downrates

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Speaker 2: into triple fees, we think have peaked about the middle

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Speaker 2: of last year, and the upgrades downrat ratio has shifted

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Speaker 2: in favor of upgrades today, and we expect that the

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Speaker 2: defour rates have also peaked or we are pretty close

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Speaker 2: to the peak of defaur rates, and over the course

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Speaker 2: of the rest of the year, we expect default rates

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Speaker 2: to keep coming down, especially if the growth stands up,

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Speaker 2: you know, and we continue to see this growth in

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Speaker 2: economic growth that we are seeing upside surprises to growth

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Speaker 2: that should translate into stronger company earnings. All of that

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Speaker 2: put together, we should see better outcomes in terms of

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Speaker 2: default and taking into account lower account dates, valuation we

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Speaker 2: think is still attractive and lows.

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Speaker 3: Hey vitiate Spencer again the question for you, since we're

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Speaker 3: talking about the syndicated loan market. In in my prior

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Speaker 3: life before Bloomberg, I spent a lot of time underwriting

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Speaker 3: and helping to syndicate leveraged loans, and that was long

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Speaker 3: enough ago that we didn't really have to compete much

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Speaker 3: with the private credit market. I know that that has

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Speaker 3: been a growing part of the financial market of the

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Speaker 3: last several years. I'm curious what impact, if any, you

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Speaker 3: see that having on the traditional syndicated loan market and

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Speaker 3: where you see the private credit market going.

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Speaker 2: I think private credit market is here today. There are

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Speaker 2: a few things I would say. I think the credit

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Speaker 2: market is both a competitor to the broadly syndicated loan

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Speaker 2: market as well as complimentary to the broadly syndicated loanmarket.

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Speaker 2: How is that. I think it is competitive in the

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Speaker 2: sense that in a periods where execution uncertainty becomes greater

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Speaker 2: in the broadly syndicated markets. The kind of execution uncertainty

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Speaker 2: both in terms of, you know, getting deals done and

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Speaker 2: the timing of deals that we saw in say twenty

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Speaker 2: twenty twenty three, even investors were faced with, you know,

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Speaker 2: a very monetary policy, monetary policy that were tightening and

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Speaker 2: financial conditions that were not that conducive. There was a

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Speaker 2: fair amount of execution uncertainty private credit markets because there

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Speaker 2: is no syndication involved, because there are one or two

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Speaker 2: lenders typically involved in a deal, you had a much

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Speaker 2: better outcome, so they could get an execution certainty and

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Speaker 2: that means higher spread for the borrowers and tougher covenants

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Speaker 2: for the lenders, both of those things in a market

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Speaker 2: where financial conditions are much easier, which is the case today,

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Speaker 2: private credit markets, which had gained share relative to the

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Speaker 2: public broadly syndicated loan market, some of that trail would

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Speaker 2: be given the gain shared would be given up this year.

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Speaker 2: But there is another part of the market for companies

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Speaker 2: that are too small to access the broadly syndicated loan market,

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Speaker 2: or companies that are way down in the distress market,

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Speaker 2: so say companies that are in B minus or negative

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Speaker 2: watch or triple C raated companies looking for definancing. The

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Speaker 2: broadly syndicated loan market is probably not very open to

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Speaker 2: those things. Because the biggest buyer of leverage loans, the clos,

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Speaker 2: have a allocation stuper triple c There is a particular

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Speaker 2: feature in the clos that dissuade them from buying triple

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Speaker 2: se loans. As a result of that, the levels the

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Speaker 2: broadly syndicated leverage loan market doesn't have a great bid

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Speaker 2: for an exit in the for the triple C rate loans,

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Speaker 2: So for those loans, private markets have really stepped in.

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Speaker 2: So in the sense that private credit pard the advent

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Speaker 2: of private credit has made the pie bigger. You know,

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Speaker 2: it's you know, the over pie is bigger. The share

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Speaker 2: of the private credit versus public credit will ever flow

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Speaker 2: depending on the market conditions, but the overall amount of

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Speaker 2: credit available to leverlish within the leveraged finances space is

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Speaker 2: actually bigger because of private credit, and I think it

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Speaker 2: also has the effect of smoothing out default cycles. So

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Speaker 2: because for you know, absent private credit for deeply distressed names,

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Speaker 2: there was no other exit. And now because of private credit,

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Speaker 2: there is a peaceable exit. Even it's an expensive exit,

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Speaker 2: but it's an exit. So that means that the companies

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Speaker 2: can title ork and that and prevent default. So put

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Speaker 2: all these things together, I think credit is here to

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Speaker 2: stay and place both competitive rule as well as a

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Speaker 2: complimentary all to the broadly syndicated markets.

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Speaker 1: So as a quick.

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Speaker 3: Follow up on that then, so you know, in the past,

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Speaker 3: when I've seen new products enter the market or new

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Speaker 3: new markets being open and they grow rapidly, usually there's

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Speaker 3: a law that's been on that has yet to be uncovered.

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Speaker 3: And as the market grows and everything's good, nobody knows

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Speaker 3: quite what that flaw is. I'm curious if there's a

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Speaker 3: flaw in the private credit market that we don't know

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Speaker 3: about yet, because everything's been kind of going relatively well

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Speaker 3: in the market since private credit really kind of came

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Speaker 3: on the scene, but it's been growing rapidly, and I'm wondering,

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Speaker 3: you know, what is what is the not maybe not

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Speaker 3: a fatal flaw, but you know, something that people might

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Speaker 3: find rears its head that they weren't expecting. I guess

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Speaker 3: my my initial thought is liquidity. If you do have

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Speaker 3: a downturn some particularly some of the larger loans, h

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Speaker 3: is there going to be a market for the lenders

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Speaker 3: to be able to manage their portfolios or because these

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Speaker 3: are private are they just kind of stuck with it?

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Speaker 3: And does that become an issue?

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Speaker 2: Actually, well, let me let me put it this say,

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Speaker 2: I don't think private credit is a panacea that solves

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Speaker 2: bad businesses. You know, if a company has if there's

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Speaker 2: an underlying business model, is a challenge business model, I

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Speaker 2: don't think private credit will resolve it or solve them.

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Speaker 2: That's having means the liquidity in related issues. In fact,

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Speaker 2: their private credit actually completely constructible. Is if a company

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Speaker 2: isn't it in some form of distressed, you know, because

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Speaker 2: of some external or something external happening that's an ordinous

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Speaker 2: event that causes some distrust to the particular company. It

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Speaker 2: is in a broadly syndicated market to resolve that distress

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Speaker 2: to intervention is much harder a because covenants are broader.

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Speaker 2: Syndicated laws are really no maintenance covenants. It's really incorrence

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Speaker 2: covenants only, so you can't really capture it. And in

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Speaker 2: the private credit market, because the covenant language is much stronger,

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Speaker 2: covenants act as a circuit breaker for for that bad

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Speaker 2: outcome to come through. And since you are only negotiating

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Speaker 2: with one or two lenders, the ability of private lenders

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Speaker 2: to step in to with additional capital, and we've seen

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Speaker 2: multiple examples from this is there and we as a

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Speaker 2: result of this, we think it's not I think these

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Speaker 2: the fact that there are one or two lenders only

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Speaker 2: makes the resolution of challenges in perrect credit market much easier.

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Speaker 2: But all that said, done down, we have to be careful.

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Speaker 2: That mean, look, there is a lot of there's not

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Speaker 2: a tremendous amount of transparency in the private credit market

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Speaker 2: and obviously these are types. So we think it's it

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Speaker 2: pays to for investors to dig into the details, understand

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Speaker 2: the credit and try to you know, you know, we've

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Speaker 2: done some deep dive on private credit recently within the

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Speaker 2: quality of the credit compares to low single bees tople

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Speaker 2: ce type of equal in credit in the public markets.

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Speaker 2: As you know, most private credit are not rated, so

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Speaker 2: you need to dig into and find the right metrics

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Speaker 2: to compare. And also keep in mind that the while

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Speaker 2: the default experience in the private credit market that we

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Speaker 2: observed doesn't show that the default experience is meaningfully higher,

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Speaker 2: it's not that different than the default experience in the

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Speaker 2: broad lea syndicated market. But that data point really reflects

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Speaker 2: the last five years. We don't have a much longer

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Speaker 2: time series our experience of you know, how private credit

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Speaker 2: has behaved in multiple cycles. So I would say that

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Speaker 2: there are for all these good reasons for private credit

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Speaker 2: to play an important, positive, constructive role. But you have

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Speaker 2: to be always be aware in terms of the of

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Speaker 2: the quality of underwriting and taking you know, understanding the

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Speaker 2: underlying credit in as much detail as possible.

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Speaker 1: Is there any danger that visually that it's kind of

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Speaker 1: distorting the pricing in the public markets in that it's

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Speaker 1: taking away supply and if you look at the way

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Speaker 1: that you know, we've seen such a such an increase

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Speaker 1: in demand and relatively you know, thin net supply, which

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Speaker 1: may be keeping spreads very tight. And if you take

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Speaker 1: the supply into the shadow banks and into private credit,

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Speaker 1: does that not make that equation worse and sort of

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Speaker 1: distort the whole risk pricing?

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Speaker 3: Not?

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Speaker 2: Not exactly in my mind. I think in during the

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Speaker 2: twenty twenty two twenty three when we saw a big

385
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Speaker 2: you know, much more tightness in the in the public markets,

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Speaker 2: you know, financial condition being tightened, private credit entering uh

387
00:23:08,800 --> 00:23:12,359
Speaker 2: entering the fray, we saw significantly higher risks semia in

388
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Speaker 2: the in private credit relative to public credit. And today

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Speaker 2: public credit through broadly syndicated loans in particular, or the

390
00:23:21,320 --> 00:23:24,600
Speaker 2: markets are open and competing very strongly with the private

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Speaker 2: trade market. So I don't think that the the you know,

392
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Speaker 2: the the fact of private credit itself creates you know,

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Speaker 2: additional risks in the system. And I think as as always,

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Speaker 2: private credit or public credit is not a panasy up

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Speaker 2: in a badman's model, so they will be defaulted in

396
00:23:48,520 --> 00:23:53,080
Speaker 2: companies if there are bad business business models and encountering

397
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Speaker 2: challenging economic circumstances and experience thus far is that that

398
00:23:58,359 --> 00:24:02,560
Speaker 2: default experience is not significantly different credit. Again, I would

399
00:24:02,600 --> 00:24:06,359
Speaker 2: warrant that that that experience we have is about the

400
00:24:06,440 --> 00:24:07,320
Speaker 2: last five years.

401
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Speaker 1: So on on sectors she has. Reading your most recent reports,

402
00:24:12,040 --> 00:24:15,600
Speaker 1: amongst other things, you flag energy is an opportunity and

403
00:24:15,640 --> 00:24:17,200
Speaker 1: that's obviously in the headlines at the moment because of

404
00:24:17,280 --> 00:24:20,280
Speaker 1: geopolitics and oil is going up, and it's possibly an

405
00:24:20,320 --> 00:24:24,119
Speaker 1: inflation risk and so on. But you mentioned opportunities in

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Speaker 1: both equity and credit. I wanted to just focus in

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Speaker 1: on the credit opportunities and and and sort of try

408
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Speaker 1: and ask you to expand a bit more on on

409
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Speaker 1: what the opportunities are and you know, how does how

410
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Speaker 1: does a bond investor take advantage of this move?

411
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Speaker 2: I think a strong oil oil market certainly boats very

412
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Speaker 2: positively for the fundamentals of the of companies, the energy companies,

413
00:24:48,440 --> 00:24:51,920
Speaker 2: And we think this boats true for both the oil

414
00:24:52,520 --> 00:24:57,680
Speaker 2: predominantly oil driven players as well as for the natural

415
00:24:57,720 --> 00:25:01,719
Speaker 2: gas players. We think the natural gas players, where prices

416
00:25:01,800 --> 00:25:06,000
Speaker 2: have actually been you know, more on the downward trajectory,

417
00:25:06,440 --> 00:25:08,960
Speaker 2: there has been significant belt tightening that actually happened in

418
00:25:09,040 --> 00:25:12,120
Speaker 2: the in the in those E n P type of players.

419
00:25:13,080 --> 00:25:17,000
Speaker 2: So we think that the the stronger oil markets, you know,

420
00:25:17,320 --> 00:25:22,040
Speaker 2: is that you know, improves the fundamentals of the of

421
00:25:22,680 --> 00:25:29,080
Speaker 2: energy oil players, and that translates into lower you know,

422
00:25:30,080 --> 00:25:34,800
Speaker 2: expectations of weakness and of credit and therefore we should

423
00:25:34,880 --> 00:25:38,680
Speaker 2: expect to see some some upgrades. All this conditions continued

424
00:25:38,680 --> 00:25:42,320
Speaker 2: to statement the system upgrades and energy space, so all

425
00:25:42,400 --> 00:25:46,399
Speaker 2: of that really translates into us being constructive for what

426
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Speaker 2: it is worth. We are constructive on energy stops with well,

427
00:25:49,640 --> 00:25:53,400
Speaker 2: so energy stocks were constructive and by extension, what's good

428
00:25:54,320 --> 00:25:57,840
Speaker 2: for stocks is also probably good in this case because

429
00:25:57,880 --> 00:26:03,800
Speaker 2: of the discipline that forced after twenty fifteen within in

430
00:26:03,880 --> 00:26:08,480
Speaker 2: these conditions and under these conditions or is good for

431
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Speaker 2: energy stocks and also tensationto being good for energy bonds.

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Speaker 2: That's you know, I think, especially energy bonds that are

433
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Speaker 2: in the double b cusppy range of investment WAID just

434
00:26:24,080 --> 00:26:26,520
Speaker 2: below investment read and we should expect to see some

435
00:26:26,960 --> 00:26:28,239
Speaker 2: upgrade potential there as well.

436
00:26:29,160 --> 00:26:32,760
Speaker 3: H Spencer Again, so just to want to jump in

437
00:26:33,160 --> 00:26:37,119
Speaker 3: to play Devil's avget, I guess since I'm a credit

438
00:26:37,560 --> 00:26:42,119
Speaker 3: or energy focused credit analyst, and so I totally agree

439
00:26:42,200 --> 00:26:45,440
Speaker 3: that from a fundamental standpoint, the sector seems to be

440
00:26:46,000 --> 00:26:48,480
Speaker 3: in perhaps its best shape it's been in in quite

441
00:26:48,560 --> 00:26:52,360
Speaker 3: some time, as companies have spent a lot of time

442
00:26:52,480 --> 00:26:56,680
Speaker 3: since twenty twenty downturn, in particular fixing their balance sheets

443
00:26:56,760 --> 00:27:00,520
Speaker 3: using free cash flow, the paydown debt, equity funded mergers,

444
00:27:00,600 --> 00:27:05,320
Speaker 3: et cetera. Where I struggle though, is credit spreads are

445
00:27:05,359 --> 00:27:08,480
Speaker 3: already at within the energy space, and whether you want

446
00:27:08,480 --> 00:27:11,840
Speaker 3: to look at high yield or investment grade and independent

447
00:27:11,880 --> 00:27:15,200
Speaker 3: producers or the energy market overall, we're within, you know,

448
00:27:15,560 --> 00:27:19,639
Speaker 3: spitting distance of the lowest credit spreads we've seen in

449
00:27:20,640 --> 00:27:26,720
Speaker 3: a decade or more. Most of the companies that have

450
00:27:26,920 --> 00:27:29,760
Speaker 3: been focused on paying down debt have kind of reached

451
00:27:29,800 --> 00:27:32,040
Speaker 3: the point where they're done with that. For maybe there's

452
00:27:32,040 --> 00:27:33,600
Speaker 3: a few bucks left that they're going to pay down,

453
00:27:33,680 --> 00:27:35,840
Speaker 3: but vast majority of the free cash flow that's being

454
00:27:35,920 --> 00:27:39,920
Speaker 3: generated today is going out the door to shareholders in

455
00:27:39,960 --> 00:27:44,640
Speaker 3: the form of stock buybacks and variable dividends. So I've

456
00:27:44,720 --> 00:27:47,680
Speaker 3: been sort of looking at this and saying, I can't

457
00:27:47,720 --> 00:27:51,399
Speaker 3: see a particular bare case scenario except for maybe some

458
00:27:51,440 --> 00:27:53,359
Speaker 3: of the high old natural gas players where you know,

459
00:27:53,800 --> 00:27:56,400
Speaker 3: natural gas prices where they are today, it's just unsustainable

460
00:27:56,440 --> 00:27:58,639
Speaker 3: for anybody in the long term. We'll see how long

461
00:27:58,680 --> 00:28:03,720
Speaker 3: that plays out the market recovers, But yeah, that I

462
00:28:03,760 --> 00:28:06,760
Speaker 3: don't really see what major barecase. But I have a

463
00:28:06,840 --> 00:28:11,359
Speaker 3: really hard time rationalizing any upside here because, like I said,

464
00:28:11,359 --> 00:28:13,920
Speaker 3: I don't think if if oil prices stay at eighty

465
00:28:13,960 --> 00:28:15,800
Speaker 3: bucks or more, everyone's gonna be generating a lot of

466
00:28:15,800 --> 00:28:17,600
Speaker 3: free casual Even if you have a spike above one

467
00:28:17,640 --> 00:28:22,119
Speaker 3: hundred due to some geopolitical event, it strikes me that

468
00:28:22,240 --> 00:28:24,080
Speaker 3: the vast majority of that is going to go out

469
00:28:24,119 --> 00:28:27,920
Speaker 3: the door to shareholders and you know, not necessarily benefit creditors.

470
00:28:29,720 --> 00:28:32,840
Speaker 2: I don't I don't have a you know, strong pushback

471
00:28:33,119 --> 00:28:38,040
Speaker 2: to the setup that you you lay out there. The

472
00:28:38,120 --> 00:28:42,040
Speaker 2: only point I would make is that the the you know,

473
00:28:42,280 --> 00:28:45,080
Speaker 2: energy borrowers have done, you know I've never had to do,

474
00:28:45,400 --> 00:28:48,000
Speaker 2: and they have done a significant amount of balance in

475
00:28:48,120 --> 00:28:50,800
Speaker 2: repair in over the course of the last few years.

476
00:28:51,320 --> 00:28:55,040
Speaker 2: And as long as credit I mean, as long as

477
00:28:55,120 --> 00:28:58,520
Speaker 2: oil types of stay in this range or or go higher,

478
00:28:58,560 --> 00:29:02,640
Speaker 2: and certainly stay about eight, I think they're underlying uh,

479
00:29:03,560 --> 00:29:06,280
Speaker 2: you know, underlying castles will be pretty robust. And our reason,

480
00:29:06,560 --> 00:29:09,760
Speaker 2: our expectation is that we will near term expectations that

481
00:29:09,840 --> 00:29:13,320
Speaker 2: we'll see some some more higher oil prices. So as

482
00:29:13,360 --> 00:29:15,240
Speaker 2: long as we stay in this world, which we think

483
00:29:15,280 --> 00:29:16,920
Speaker 2: there is a very good case to be made that

484
00:29:17,080 --> 00:29:20,400
Speaker 2: oil prices will stay in above eighty. Actually we are

485
00:29:20,440 --> 00:29:24,160
Speaker 2: our base cases ninety four to the near term. I

486
00:29:24,280 --> 00:29:29,120
Speaker 2: don't see a challenge for the for the for the

487
00:29:30,120 --> 00:29:34,520
Speaker 2: energy bonds. And you know, our credit spreads tight. Credit

488
00:29:34,560 --> 00:29:36,440
Speaker 2: spreads are indeed tight, and they have been tight. And

489
00:29:36,640 --> 00:29:39,720
Speaker 2: I would say that the putting in the you know,

490
00:29:40,600 --> 00:29:42,760
Speaker 2: if I can go back to a point I was

491
00:29:42,840 --> 00:29:46,560
Speaker 2: made making earlier, we'll think that the better opportunity within

492
00:29:46,720 --> 00:29:50,360
Speaker 2: the credit space overall leverage finance spaces and in the

493
00:29:50,440 --> 00:29:55,320
Speaker 2: loans versus high boss, that's that remains. So that having

494
00:29:55,400 --> 00:29:58,880
Speaker 2: been said, if you're looking for opportunities within the high space,

495
00:29:59,840 --> 00:30:02,800
Speaker 2: in know, if your investment date is limited to how

496
00:30:02,840 --> 00:30:09,160
Speaker 2: you bonds, I think Energy still has positive technical, positive technicals,

497
00:30:09,240 --> 00:30:10,800
Speaker 2: and positive fundamentals ahead.

498
00:30:11,880 --> 00:30:14,160
Speaker 1: So the other big coll that kind of stood out

499
00:30:14,160 --> 00:30:16,840
Speaker 1: for me in your recent report that she was you know,

500
00:30:16,920 --> 00:30:21,320
Speaker 1: besides leverage loans, you like triple C rated bonds. That's

501
00:30:21,320 --> 00:30:23,440
Speaker 1: something that a lot of people tend to stay away

502
00:30:23,480 --> 00:30:26,240
Speaker 1: from you know, they like everything else in credit apart

503
00:30:26,280 --> 00:30:28,240
Speaker 1: from that because they think that's where the most defaults

504
00:30:28,280 --> 00:30:31,360
Speaker 1: are going to be. Obviously, but given your duvish view

505
00:30:31,480 --> 00:30:33,080
Speaker 1: and and you know the way the where the equity

506
00:30:33,120 --> 00:30:35,120
Speaker 1: markets are performing, I mean, it seems to make sense.

507
00:30:35,200 --> 00:30:37,960
Speaker 1: But but do you are you very selective there? And

508
00:30:38,000 --> 00:30:39,320
Speaker 1: how do you play triple c's right now?

509
00:30:41,320 --> 00:30:43,920
Speaker 2: I think the argument for triple c's is really a

510
00:30:44,000 --> 00:30:47,920
Speaker 2: valuation of them. So if you compare where the credit

511
00:30:48,920 --> 00:30:54,480
Speaker 2: where credit stacks out across the the across the you know,

512
00:30:54,680 --> 00:30:58,720
Speaker 2: credit spectrum, you know the place where the way we

513
00:30:58,800 --> 00:31:02,000
Speaker 2: look at it is that where credit spreads in across

514
00:31:02,120 --> 00:31:06,400
Speaker 2: various parts of the credit structures in relative to a

515
00:31:06,480 --> 00:31:11,280
Speaker 2: long term history, triple c's are about the fifty percentile

516
00:31:11,440 --> 00:31:14,520
Speaker 2: of the last twenty year range. And you compare that

517
00:31:14,640 --> 00:31:18,280
Speaker 2: to you know, higher bonds for example, are you know,

518
00:31:18,440 --> 00:31:23,080
Speaker 2: closer to ten percent of the ten ten percentile of

519
00:31:23,200 --> 00:31:26,520
Speaker 2: the last twenty year range investment we had credit maybe

520
00:31:26,560 --> 00:31:29,680
Speaker 2: twelve thirteen percent. So by all of those metrics, the

521
00:31:29,760 --> 00:31:33,000
Speaker 2: rest of the parts of the market, from IG to

522
00:31:33,160 --> 00:31:37,680
Speaker 2: high single age, double b's, triple bs, et cetera, look

523
00:31:37,760 --> 00:31:41,400
Speaker 2: at their very tight end evaluation. The one thing that

524
00:31:41,520 --> 00:31:45,400
Speaker 2: stands out is really the triple c's triple CS that

525
00:31:45,840 --> 00:31:48,680
Speaker 2: you know, over seven hundred basis points stands out in

526
00:31:48,720 --> 00:31:51,480
Speaker 2: the middle of that of the twenty year range. So

527
00:31:52,080 --> 00:31:56,720
Speaker 2: the argument for triple c's is a valuation argument. And

528
00:31:57,040 --> 00:32:00,760
Speaker 2: the next augument is that is the growth in particularly

529
00:32:00,880 --> 00:32:03,480
Speaker 2: earnings growth that we're predicting. So we are predicting that

530
00:32:03,640 --> 00:32:07,080
Speaker 2: twenty twenty four will see high single digit seventy eight

531
00:32:07,160 --> 00:32:10,240
Speaker 2: percent type of earning growth in SMB five hundred a

532
00:32:10,720 --> 00:32:14,320
Speaker 2: fifteen to twenty fifteen seventeen percent earnings growth in twenty

533
00:32:14,400 --> 00:32:18,800
Speaker 2: twenty five. So against that background of you know, not

534
00:32:19,360 --> 00:32:21,480
Speaker 2: not rich, not cheap, in the middle of the range

535
00:32:21,560 --> 00:32:26,360
Speaker 2: valuations and with the with the the tail winds of

536
00:32:26,840 --> 00:32:31,680
Speaker 2: improving earnings, we think that's that is what makes the

537
00:32:31,760 --> 00:32:32,640
Speaker 2: case for triple.

538
00:32:32,480 --> 00:32:35,520
Speaker 1: Ceas are there any parts of that market that you

539
00:32:35,640 --> 00:32:36,960
Speaker 1: just avoid, you know, sexor wise.

540
00:32:38,520 --> 00:32:40,360
Speaker 2: Actually, once you get to triple cs, you need to

541
00:32:40,400 --> 00:32:42,920
Speaker 2: do work on a name by name basis, and as

542
00:32:43,000 --> 00:32:46,280
Speaker 2: opposed to I would rather not take a sector view

543
00:32:46,400 --> 00:32:49,480
Speaker 2: on on triple CS, and it's really a name by

544
00:32:49,560 --> 00:32:52,160
Speaker 2: name basis. You have to do the work on triple season.

545
00:32:52,600 --> 00:32:55,920
Speaker 1: Okay, and talking of other areas of risk, I mean

546
00:32:55,960 --> 00:32:59,600
Speaker 1: you did some great writing recently on commercial real estate,

547
00:32:59,600 --> 00:33:02,040
Speaker 1: which we'vebviously looked at in great details of subjects of

548
00:33:02,120 --> 00:33:07,040
Speaker 1: great interests for readers. What's your takeaway. I mean, obviously

549
00:33:07,080 --> 00:33:09,680
Speaker 1: there are problems, you know, the individual level, but is

550
00:33:09,720 --> 00:33:12,760
Speaker 1: there a bigger problem there? I mean, if you some

551
00:33:12,880 --> 00:33:14,600
Speaker 1: of our guests have said that hundreds of banks in

552
00:33:14,600 --> 00:33:16,360
Speaker 1: the US may fail because of it. Is that is

553
00:33:16,440 --> 00:33:18,120
Speaker 1: that going to bleed through to the rest of the

554
00:33:18,160 --> 00:33:18,720
Speaker 1: credit market.

555
00:33:20,160 --> 00:33:23,040
Speaker 2: I think there is no doubt that the regal banking

556
00:33:23,080 --> 00:33:26,680
Speaker 2: system has a substantial exposure to commercial real faith. And

557
00:33:26,880 --> 00:33:31,440
Speaker 2: I will now and given the regularly environment ahead for

558
00:33:31,640 --> 00:33:36,720
Speaker 2: the smaller regional banks, the underlying business model is clearly

559
00:33:36,800 --> 00:33:41,000
Speaker 2: under the threat, and that the commercial real estate exposure,

560
00:33:41,120 --> 00:33:46,160
Speaker 2: which is disproportionately higher with the smaller banks, makes that

561
00:33:46,360 --> 00:33:51,520
Speaker 2: challenge very very difficult to overcome. That having been said,

562
00:33:51,720 --> 00:33:53,800
Speaker 2: we think this is the way I would describe caustial

563
00:33:53,840 --> 00:33:57,000
Speaker 2: real the state challenge. It is not it does not

564
00:33:57,280 --> 00:33:59,720
Speaker 2: leach to a systemic risk level. You know, in my

565
00:33:59,800 --> 00:34:03,800
Speaker 2: mind commercial real estate that is not systemic, but a

566
00:34:04,000 --> 00:34:08,680
Speaker 2: persistent risk. So our distinguish it been systemic risk and

567
00:34:09,000 --> 00:34:12,400
Speaker 2: persistent risks. So we will. The commercial real estate challenges

568
00:34:12,440 --> 00:34:15,359
Speaker 2: are not going to be over tomorrow next year. They

569
00:34:15,360 --> 00:34:17,920
Speaker 2: will be there for some time to come. We have

570
00:34:18,120 --> 00:34:21,520
Speaker 2: a significant valuation adjustments that need to happen, a secular

571
00:34:21,640 --> 00:34:25,640
Speaker 2: change in office as a property that has occurred. You know,

572
00:34:25,719 --> 00:34:29,160
Speaker 2: we have to all the eventual evaluations will have to

573
00:34:29,400 --> 00:34:34,120
Speaker 2: reflect these significant changes that occurred. That will take time,

574
00:34:34,760 --> 00:34:38,440
Speaker 2: so we will. We will keep talking about commercial real

575
00:34:38,520 --> 00:34:41,080
Speaker 2: estate for some time to come. But I think that

576
00:34:41,360 --> 00:34:44,600
Speaker 2: it does not raise to the systemic risk issues that

577
00:34:44,760 --> 00:34:46,879
Speaker 2: some people are worried about.

578
00:34:47,760 --> 00:34:49,600
Speaker 1: Is there anything out there that worries you mean, we're

579
00:34:49,600 --> 00:34:52,160
Speaker 1: a credit show, so we worry about everything. I'm sure

580
00:34:52,200 --> 00:34:54,440
Speaker 1: Spencer is just sitting there worried about other stuff. But

581
00:34:54,800 --> 00:34:57,600
Speaker 1: what really concerns you visually about the outlook for credit

582
00:34:57,640 --> 00:34:58,000
Speaker 1: this year?

583
00:34:59,200 --> 00:35:01,719
Speaker 2: I think the key that worries me is if the

584
00:35:01,840 --> 00:35:05,640
Speaker 2: next policy move is not a cut, But if the

585
00:35:05,800 --> 00:35:08,960
Speaker 2: next policy move is a hike, a pause, or a cut,

586
00:35:09,080 --> 00:35:12,000
Speaker 2: I am less worried about a hike. I am most

587
00:35:12,080 --> 00:35:13,240
Speaker 2: certainly worried about.

588
00:35:13,719 --> 00:35:17,760
Speaker 1: So the base case is just to lean into the risk. Basically,

589
00:35:18,040 --> 00:35:20,280
Speaker 1: leverage loans and triple cs. Is that is that the takeaway?

590
00:35:21,000 --> 00:35:23,720
Speaker 2: I mean, leverage known triples are some of the spots,

591
00:35:23,760 --> 00:35:27,239
Speaker 2: but overall, I think the one takeaway from this discussion,

592
00:35:27,600 --> 00:35:30,640
Speaker 2: if you would, if you remember, would be that credit,

593
00:35:31,200 --> 00:35:34,840
Speaker 2: broadly speaking, is a positive carry asset and that stands

594
00:35:34,960 --> 00:35:38,719
Speaker 2: in tart contrast to other assets within fixed income, in

595
00:35:38,800 --> 00:35:44,920
Speaker 2: particular the rate market. So the positive carry boats particularly

596
00:35:45,000 --> 00:35:49,080
Speaker 2: well for credit. And you, you know, you add all

597
00:35:49,120 --> 00:35:52,400
Speaker 2: the other factors, both technical and fundamentals that I've described,

598
00:35:52,719 --> 00:35:56,440
Speaker 2: and that that makes the augument robust. But the positive

599
00:35:56,480 --> 00:35:58,799
Speaker 2: carry is something that's the key driver here.

600
00:35:59,320 --> 00:36:01,120
Speaker 1: Are there any sign of frust in your mind?

601
00:36:01,640 --> 00:36:05,239
Speaker 2: I think when you're discussing faut, I think you need

602
00:36:05,280 --> 00:36:12,759
Speaker 2: to keep in mind that credit investing requires an understanding

603
00:36:12,800 --> 00:36:16,280
Speaker 2: of credit and the fundamentals of credit. So this market

604
00:36:16,640 --> 00:36:20,600
Speaker 2: in the last ten years has been predominantly a macro

605
00:36:20,960 --> 00:36:24,200
Speaker 2: driven market. I think we have now transitioned into what

606
00:36:24,400 --> 00:36:28,240
Speaker 2: is really a credit pickers market. The two credit market

607
00:36:28,520 --> 00:36:33,000
Speaker 2: fundamentals are really valuable today as opposed to a beta

608
00:36:33,160 --> 00:36:36,680
Speaker 2: from the larger what the FED does, what the ECB did,

609
00:36:37,000 --> 00:36:40,280
Speaker 2: or what the Q program or all of those factors

610
00:36:40,600 --> 00:36:45,400
Speaker 2: are far less relevant going forward, and two credit picking

611
00:36:45,480 --> 00:36:49,840
Speaker 2: becomes the most important aspect, and two credit pickers or

612
00:36:49,920 --> 00:36:52,400
Speaker 2: two credit pickers, this is an idea market.

613
00:36:53,239 --> 00:36:56,200
Speaker 1: When I talked to Byside, is you know big portfolio

614
00:36:56,280 --> 00:36:58,600
Speaker 1: managers about spreads being so tight. I mean they say

615
00:36:58,600 --> 00:37:00,560
Speaker 1: it doesn't really matter, and then in a person a

616
00:37:00,600 --> 00:37:03,399
Speaker 1: bit and they say, well, it doesn't matter until it does,

617
00:37:03,600 --> 00:37:05,719
Speaker 1: by which they mean it doesn't matter until there's a

618
00:37:05,719 --> 00:37:09,839
Speaker 1: big vole event. There are many things out there, you know, geopolitics,

619
00:37:09,840 --> 00:37:11,480
Speaker 1: there are some big elections coming up. There are many

620
00:37:11,520 --> 00:37:15,040
Speaker 1: things out there that could cause of volatility, you know,

621
00:37:15,200 --> 00:37:19,800
Speaker 1: ripping event that the effects credit? How do you position

622
00:37:19,880 --> 00:37:21,160
Speaker 1: for that? How do you hedge against that? How do

623
00:37:21,239 --> 00:37:23,000
Speaker 1: you how do you view that as a risk.

624
00:37:23,960 --> 00:37:26,120
Speaker 2: The way I look at it is, you know, exorginant shocks,

625
00:37:26,160 --> 00:37:29,840
Speaker 2: whether geopolitical or elsewhere you know or other sources of

626
00:37:30,120 --> 00:37:33,440
Speaker 2: exoging shocks would affect all risk markets, and credit markets

627
00:37:33,480 --> 00:37:36,600
Speaker 2: are by no means an exception to this. We think

628
00:37:36,680 --> 00:37:40,160
Speaker 2: that for all the reasons we've discussed, fundamental and technical

629
00:37:40,880 --> 00:37:45,600
Speaker 2: credit markets are better able to withstand some of those

630
00:37:45,640 --> 00:37:48,920
Speaker 2: exorginant shocks, not all of them. Some of those exhaust shocks,

631
00:37:49,200 --> 00:37:53,760
Speaker 2: credit markets can stand better, and they're not entirely dependent

632
00:37:53,920 --> 00:37:57,719
Speaker 2: on great cups. They are. They are dependent on the

633
00:37:57,800 --> 00:38:00,560
Speaker 2: next move not being a hike, but the timing and

634
00:38:00,680 --> 00:38:04,640
Speaker 2: the magnitude of matters less for credit than for other

635
00:38:04,840 --> 00:38:09,480
Speaker 2: macro markets. So in that sense, credit markets vulnerability to

636
00:38:09,680 --> 00:38:12,120
Speaker 2: exhort in the shocks is absolutely there and the right

637
00:38:12,200 --> 00:38:16,560
Speaker 2: opportunities to hedge. There are several instruments available to hedge,

638
00:38:16,719 --> 00:38:23,120
Speaker 2: and I think careful risk management is absolutely the the

639
00:38:23,640 --> 00:38:26,960
Speaker 2: you know, absolutely critical, has never been more critical than

640
00:38:27,000 --> 00:38:29,640
Speaker 2: it is today, even all the various potions that could happen.

641
00:38:30,160 --> 00:38:32,600
Speaker 2: But when we are taking a bigger picture of view

642
00:38:33,880 --> 00:38:39,120
Speaker 2: fixed income in general, credit in particular, it seems like

643
00:38:39,160 --> 00:38:40,400
Speaker 2: a pretty attractive pace to be here.

644
00:38:41,080 --> 00:38:44,239
Speaker 1: Great stuff the sh Tirpreteur Chief Fixed Income Stretchest that

645
00:38:44,320 --> 00:38:45,960
Speaker 1: Morgan Sandy has been a pleasure having you on the

646
00:38:45,960 --> 00:38:46,440
Speaker 1: Credit Edge.

647
00:38:46,440 --> 00:38:48,879
Speaker 2: Many thanks thanks for having me. Look forward to doing

648
00:38:48,920 --> 00:38:49,279
Speaker 2: this again.

649
00:38:49,840 --> 00:38:52,200
Speaker 1: And Spencer Cussid with Bloomberg Intelligence, thank you very much

650
00:38:52,280 --> 00:38:53,160
Speaker 1: for being back on the show.

651
00:38:53,800 --> 00:38:54,080
Speaker 2: Thank you.

652
00:38:54,239 --> 00:38:56,240
Speaker 3: James Harpley do it check.

653
00:38:56,160 --> 00:38:59,280
Speaker 1: Out all of Spencer's excellent analysis on the Bloomberg terminal,

654
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Speaker 1: and please do subscribe wherever you get your podcasts. We're

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Speaker 1: on Apple, Spotify, and all other good podcast providers, including

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Speaker 1: the Bloomberg Terminal. Give us a review, tell your friends,

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Speaker 1: or email me directly at jcrombieight at bloomberg dot net.

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Speaker 1: I'm James Crombie. It's been a pleasure having you join

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Speaker 1: us again. Next week on the Credit Edge,