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

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Speaker 1: My name is James Crumby. I'm a senior ed his

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Speaker 1: her at Bloomberg and I'm Arnold.

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Speaker 2: Kakuta, senior credit analyst covering US banks at Bloomberg Intelligence.

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Speaker 2: So this week we're very pleased to welcome Meghan Raper,

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Speaker 2: global head of Debt capital Markets at Barkley's.

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Speaker 3: How you doing, Meghan, I'm great, good to be here,

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Speaker 3: Lots to talk.

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Speaker 2: About, absolutely so. Barkley's right, as you know, is a

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Speaker 2: bolt racket bank, and in its investment banking review last year,

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Speaker 2: Meghan's debt honorary business it was highlighted as the firm's

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Speaker 2: relative strength, and this strong business performance was a part

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Speaker 2: of why Meghan was named as one of the American

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Speaker 2: bankers most Powerful Women in Finance in twenty twenty three.

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Speaker 2: So I'm very excited to hear her. Abews.

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Speaker 3: Oh, thanks on the shoulders of giants. I think you know,

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Speaker 3: representing a team effort for sure, but thank you for

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Speaker 3: that a humbling introduction, and you.

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Speaker 1: Said debt capital markets. And also just to set the

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Speaker 1: scene on that, we are seeing a lot of global

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Speaker 1: market volatility that's made things very challenging for companies that

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Speaker 1: want to raise debt this week, the window is wide open.

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Speaker 1: After a seeming thought in the trade war, the US

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Speaker 1: and China made some progress by agreeing to slash tariffs

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Speaker 1: on both sides, but next week it may well slam shut.

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Speaker 1: There's a huge amount of volatility and uncertainty, making it

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Speaker 1: very difficult for business leaders to make long term decisions

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Speaker 1: about anything, let alone funding and refinancing plans. Meanwhile, there

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Speaker 1: are cracks appearing on the demand side as investors look

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Speaker 1: to diversify away from the US and private lenders are

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Speaker 1: looking to steal some of the business from public bond

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Speaker 1: and loan markets. So, Megan, where does that leave us?

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Speaker 1: What's the outlook for the rest of the year. E bullish?

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Speaker 3: I am. I think you know, we've sort of been

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Speaker 3: unwavering in the investment grade market, and so if you're

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Speaker 3: looking for flight to quality trades, investment grade has really

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Speaker 3: been affording that. And so even as we've watched volatility

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Speaker 3: play out across other asset classes, we've remained fairly functional

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Speaker 3: and orderly, and there's been no shortage of appetite for

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Speaker 3: credit even through a pretty unprecedented number of weeks.

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Speaker 2: And you know, You've been a star both on TV

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Speaker 2: and also at our credit conferences, So thank you very

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Speaker 2: much there. But if I recall, I think at the

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Speaker 2: year end conference in December, and I know the world

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Speaker 2: has changed, you know, for the worst, and maybe maybe

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Speaker 2: we're back on pace. But I believe you mentioned the

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Speaker 2: forecast for this year USIG credit about one point sixty

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Speaker 2: five trillion, maybe a little bit, you know, ahead of

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Speaker 2: last year's pace. So can we still get there?

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Speaker 3: Is?

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Speaker 2: Do we need an m and a pickup for that

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Speaker 2: to happen? What are your views now?

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Speaker 3: I think it's possible, you know, I think that you know,

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Speaker 3: the the there's not a credit issue as we look

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Speaker 3: at the dynamics that are playing out in the backdrop.

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Speaker 3: So you know, the announcements over the course of this

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Speaker 3: past weekend I think have given new life. And so

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Speaker 3: while we were unshaken, it is fair to say we

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Speaker 3: saw fits and starts of activity in the primary market.

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Speaker 3: So April was very very touch and go, not because

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Speaker 3: of demand dynamics, but rather issuers who were defensive heading

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Speaker 3: into the year, picking and choosing their windows, and so

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Speaker 3: you're seeing very hefty concentrations of supply. So any given

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Speaker 3: month we're actually threading the needle effectively well, meaning two

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Speaker 3: thirds of supply are coming in five business days. We

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Speaker 3: saw that in January, it was a record January start

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Speaker 3: to the year. We saw that in February, in March,

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Speaker 3: and again in April, and so these sort of searching

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Speaker 3: for optimal windows of execution is the more challenging piece

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Speaker 3: of the equation. And I also think we're going to

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Speaker 3: see a front loading of activity. There's been a healthy

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Speaker 3: amount of supply acceleration and so the top line numbers

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Speaker 3: you're seeing in terms of investment grade supply have been

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Speaker 3: driven not by a nominal uptick and funding needs, but

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Speaker 3: actually pulling forward of those needs with a view that

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Speaker 3: things could get choppier into the second half.

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Speaker 1: I do want to dig into the pipeline, but first

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Speaker 1: I wanted to usk about the net issuance number because

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Speaker 1: we've been saying on this show for a long time

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Speaker 1: that spreads are very tight. But part of that is

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Speaker 1: really the supply demand technicals. In fact, the fact that

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Speaker 1: there isn't enough supply and there's a lot of demand

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Speaker 1: for yield and that just keeps things tight. Where are

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Speaker 1: we on a net basis and where do we go, yeah.

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Speaker 3: I mean, so you look at the headline numbers, we're

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Speaker 3: actually running a couple of percentage points above where we

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Speaker 3: were this time last year. Some of that driven by

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Speaker 3: a week that, as we kicked off May, has supported

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Speaker 3: seventy five billion of supply, But on a gross basis,

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Speaker 3: that feels like pretty measured on a net supply basis,

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Speaker 3: as we account for that record wall of COVID death

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Speaker 3: that's maturing this year, paired with coupon income that's upwards

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Speaker 3: a four hundred billion, and the dollar market, so cash

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Speaker 3: naturally rotating back to be invested, means that net net

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Speaker 3: were down sixteen percent. And so as you say this,

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Speaker 3: the technicals have become an incredibly powerful force to underpinning

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Speaker 3: the functionality of investment grade in particular, and that's a

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Speaker 3: theme we see exacerbated. There was some signs of concern.

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Speaker 3: We were seeing some signaling the lip or data is

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Speaker 3: probably a healthy gauge of sort of investor sentiment, and

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Speaker 3: we did see eight consecutive weeks of outflows, which there

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Speaker 3: was some fear was that being driven by international money

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Speaker 3: leaving investment markets. IG markets actually see twenty two percent

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Speaker 3: of demand coming from offshore investors, and so it's something

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Speaker 3: we've been closely scrutinizing, and I think fair to say

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Speaker 3: it is a bit difficult given how entangled and globalized

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Speaker 3: the investment grade markets have become. To see investors without

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Speaker 3: sort of shooting themselves in their own foot, thinking about

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Speaker 3: exiting one currency versus the other. And so the order

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Speaker 3: books we've seen in recent weeks, there's no signs of

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Speaker 3: that demand abating that international bid. We're actually seeing the

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Speaker 3: Middle East, Asia, Europe really consistently playing and if anything,

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Speaker 3: there's more breadth than depth to that bid. Then we've

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Speaker 3: seen now that yields, as you suggest, to become as

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Speaker 3: palatable as they are.

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Speaker 2: And so you talked about the international demand, but then

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Speaker 2: on the backdrop of that, we also hear about the

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Speaker 2: testing of US exceptionalism, Right, So do you think that's

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Speaker 2: more of a kind of longer end treasury yield type

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Speaker 2: concern or is that gonna Do you feel like some

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Speaker 2: of that concern might filter into the corporate bond markets

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Speaker 2: here in the US?

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Speaker 3: Yeah, that Sell America narrative was really tied to watching

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Speaker 3: flows in the equity market. I think there certainly we've

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Speaker 3: seen some pairing back of exposure that started well before

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Speaker 3: the last couple of months. On the treasury side as well, credit,

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Speaker 3: as I say, is a bit more enmeshed between those two.

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Speaker 3: So if you think about issuers that have debt outstanding

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Speaker 3: in the euro market, two thirds of those borrowers that

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Speaker 3: are European appealing to the dollar market actually have dollar

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Speaker 3: dead outstanding, and fifty percent of those with dollar dead

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Speaker 3: outstanding have deat outstanding in the European markets as well.

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Speaker 3: So there's a lot of cross pollination there that makes

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Speaker 3: the idea of expressing a sell America view much more

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Speaker 3: humbersome in my world than what maybe others are saying

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Speaker 3: away from us. So we think it's unlikely that that

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Speaker 3: theme continues.

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Speaker 1: But where does that leave spreads? They seem very tight,

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Speaker 1: you know, if you consider that, you know, there's kind

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Speaker 1: of a round trip after so called Liberation Day they

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Speaker 1: blew out. Now they're back down below one hundred on

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Speaker 1: the IG index. But there does seem to have been

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Speaker 1: some fundamental damage to the economy. There's you know, still inflation,

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Speaker 1: there's there's a lot of questions about recession. Is the

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Speaker 1: risk of all that stuff properly reflected right now in

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Speaker 1: the IG spread.

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Speaker 3: Well, it's a great point, James. I actually don't think

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Speaker 3: that we feel like risk is being properly evaluated. The

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Speaker 3: technicals are overwhelming where fair value should be, and I

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Speaker 3: think unfortunately the pain trade if you're an investor, is

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Speaker 3: probably tighter, even though I've yet to find an investor

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Speaker 3: who would say they're bullish here. The good news is

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Speaker 3: there are some silver linings. If you look at what's

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Speaker 3: transpired in the last forty eight hours, every economist across

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Speaker 3: the street, including Barkley's economists, are revising sort of worst

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Speaker 3: case scenarios out of the equation. So if anything, we've

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Speaker 3: hit a reset button and we're seeing sort of the

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Speaker 3: upside of less bad, if you will. And so as

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Speaker 3: a result of that, we do think that tariffs in

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Speaker 3: and of itself will be inflationary. We're still settling in

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Speaker 3: it all in you know, weighted tariff and average weighted

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Speaker 3: tariff percentage of around seventeen percent, you know, So it's

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Speaker 3: worse than we thought two months ago on that count.

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Speaker 3: What does that mean? It does mean inflation takes higher,

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Speaker 3: but off of the worst level. So we think core

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Speaker 3: PCE actually is around three three as we look at

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Speaker 3: Q four Q four numbers. It does mean growth is

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Speaker 3: going to contract, but I think we've now eliminated the

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Speaker 3: prospect of a recession as the baseline outcome. As we

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Speaker 3: look at at the end of the year, we're probably up.

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Speaker 3: You're going to be a growth slow down, but maybe

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Speaker 3: that's five tenths of growth, so not nearly as pronounced

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Speaker 3: as some had feared. And then the unemployment piece is

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Speaker 3: the other part of this, which is rarely where the

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Speaker 3: Fed's hands are tied, and we think that is off

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Speaker 3: of worst case outcomes. Probably closer to four point three

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Speaker 3: percent is where we top out at the end of

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Speaker 3: the year.

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Speaker 1: So FED hands tied. Does that mean no cut this year?

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Speaker 3: I don't think it means no cuts this year. But

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Speaker 3: I do think this wait and see strategy is going

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Speaker 3: to prove to have been the right call. I think

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Speaker 3: you're going to see very consistent. There's an avalanche of

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Speaker 3: FED speak this week, and I think you're going to

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Speaker 3: see that the FED governors are aligned in their view,

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Speaker 3: which is that yes, tariffs by their very nature are inflationary.

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Speaker 3: There are risks to that being more long standing rather

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Speaker 3: than just one off. And at the same time, the

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Speaker 3: economy now is likely to be in a better spot,

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Speaker 3: so the urgency to cut will be less than people

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Speaker 3: had expected. The market's still pricing in two cuts before

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Speaker 3: the end of the year. Our evolving view is now

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Speaker 3: that we'll see one cut, and that's likely to come

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Speaker 3: in December. And I think there's real risk that if

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Speaker 3: the economy holds up as well as it appears to

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Speaker 3: be looking at some of the hard data that we are,

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Speaker 3: you know, at risk of seeing all of that push

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Speaker 3: back into twenty twenty six.

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Speaker 2: And then in terms of sectors, who do who do

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Speaker 2: you think might perform underperform, you know, space, I guess

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Speaker 2: that the you call them the self funders, right, the

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Speaker 2: biggest banks at least in the US, you know, record

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Speaker 2: issues in January, and they've still been very active. I

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Speaker 2: guess part of that to fun you know, very active

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Speaker 2: trading desks, which I guess that's the one you know

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Speaker 2: good that you know, all this volatively has been good

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Speaker 2: so far, so you know, and but their spreads have

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Speaker 2: kind of wind out a little bit more than others.

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Speaker 2: So you know, if we get some of these more

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Speaker 2: kind of trade flightworks or whatever, and you know, maybe

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Speaker 2: less issuance, do you think maybe financials can can have

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Speaker 2: a little bit more room to outperform corporates or what

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Speaker 2: are your views and what sectors might perform, underperform, or outperform.

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Speaker 3: It's a great point, I think as we look at

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Speaker 3: the evolving landscape here, one thing that stands out to

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Speaker 3: me is that the laggards are those that are benefiting

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Speaker 3: from an uptick and demand. We saw that yesterday in

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Speaker 3: secondary trading volumes, so cyclicals had underformed, Triple b's had underperformed.

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Speaker 3: And even as you say, with the material correction that

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Speaker 3: we've seen in financials off the wides of twenty twenty

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Speaker 3: three post the banking crisis, they still are trading on

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Speaker 3: average about nine basis points back at the last twelve

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Speaker 3: month median. And so it does feel like there's incremental

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Speaker 3: room for compression in financials who are less exposed to tariffs,

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Speaker 3: benefiting from an expectation of deregulation, and have net funding

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Speaker 3: needs that are actually lower on the year. So there's

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Speaker 3: value to be had in financials. I hear that consistently

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Speaker 3: when I'm out talking to the biggest investors in the market.

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Speaker 3: I think we're going to see support and we already

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Speaker 3: did today. There's an uptick in eighty one issuance, which

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Speaker 3: here again, if you're yield focused, buying down the capital

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Speaker 3: stack in financials is another place we see real opportunity.

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Speaker 3: The self funders is an interesting one. I think there

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Speaker 3: again it's front loading. So if you needed supply acceleration,

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Speaker 3: there's no better place to look at that than in

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Speaker 3: self funders, who are up twenty one percent in a

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Speaker 3: market that's barely up year over year. All of that

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Speaker 3: is putting their money where their mouth is, advising clients

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Speaker 3: to say, look, there's a real risk on the horizon. Yes,

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Speaker 3: things are better than they were, but the baseline is still,

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Speaker 3: you know, worse than what we had envisioned, and you

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Speaker 3: need to be prepared for it and take advantage of

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Speaker 3: windows as they present themselves. And the self funders in

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Speaker 3: the Big six in particular, I've really monetized on that perspective.

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Speaker 2: Then, I think, even even throughout this April volatility, I

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Speaker 2: think even kind of you know, harping on the strength

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Speaker 2: of the ig USLL market, but what will kind of

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Speaker 2: dethrone kind of that view, Like what would make you

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Speaker 2: kind of concerned you're still sticking with the one point

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Speaker 2: six five trillion potential for this year. So what will

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Speaker 2: kind of shake your condiction in that view.

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Speaker 3: Well, I think if we were to see a reinstatement,

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Speaker 3: if we if you know, we've seen some handshakes around

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Speaker 3: some of these trade deals, they aren't actually granular in

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Speaker 3: the detail. And you know, we've got a ninety day

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Speaker 3: pause here, it could be extended. Europe is sort of

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Speaker 3: the next major gating item as it relates to that front.

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Speaker 3: We are being underpinned in investment grid credit by yields.

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Speaker 3: That's true when you talk to hedge funds, that's true

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Speaker 3: when you talk to asset managers. The spreads, as we say,

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Speaker 3: aren't necessarily pricing and enough risk, but it's being compensated

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Speaker 3: because of what's happening underlying treasuries. So I think you've

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Speaker 3: got to wonder what happens to the Trump put if

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Speaker 3: we look at the underlying treasury yields. So every asset

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Speaker 3: class on the heels of the weekend news retraced across

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Speaker 3: the board, with the exception of rates. So you have

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Speaker 3: VIX well below twenty, You've got S and P rallying.

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Speaker 3: You've got the US dollar in the greatest move we've

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Speaker 3: seen since the election, you got credit spreads back to

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Speaker 3: ninety four rates are till still trending higher. That is

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Speaker 3: fundamental to what's underpinning the demand for credit, and I

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Speaker 3: think there's a question of what can Trump do to

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Speaker 3: affect a FED put that would bring those levels down,

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Speaker 3: because what we've seen is the guardrails are the US

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Speaker 3: dollar and long term yields, in part because he's got

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Speaker 3: to think about the deficit. That's chapter two, and it's

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Speaker 3: maybe a whole other segment, But at at the end

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Speaker 3: of the day, I worry that if we were to

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Speaker 3: see a FED or a Trump put as it relates

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Speaker 3: to long dated treasuries and those yield start to come

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Speaker 3: back down, that that erodes some of the bid that's

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Speaker 3: there to benefit from the income that that's currently affording them.

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Speaker 1: On the Trump put. Megan competitor Bank of America recently

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Speaker 1: wrote that there is a Trump put in credit and

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Speaker 1: that will keep IG spreads below one thirty. Is that

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Speaker 1: your assumption?

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Speaker 3: I don't agree with that. I'm not sure he's looking

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Speaker 3: at functionality of credit markets, and I don't think he

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Speaker 3: really cares about normal spreads in the same way. I

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Speaker 3: think he's backed away from the equity markets as a gauge,

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Speaker 3: it really is about the US dollar and ultimately about

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Speaker 3: long dated treasuries. I do think he's got a tax

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Speaker 3: plan he needs to get through. That's that's the second

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Speaker 3: half of the year and the debate. He doesn't hold

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Speaker 3: the purse strings around that Congress does. But the cost

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Speaker 3: of that is incriminally more expensive is yields move higher.

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Speaker 3: So that's hard to envision what he could actually affect.

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Speaker 3: I mean, maybe that's doubling down to the Mari Lago accord.

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Speaker 3: Maybe that's trying to convince Asia to step back in

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Speaker 3: and be an outsized supporter. I'm sure you'll put pressure

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Speaker 3: pressure on the Fed to re institute sort of deregulation

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Speaker 3: to afford the banks to step in as in an

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Speaker 3: intermediary there. But that remains to be seen. We're in

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Speaker 3: early days, and that could evolve by the minute, if

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Speaker 3: not the hour.

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Speaker 1: Yeah, yeah, I mean, I certainly don't want to go

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Speaker 1: too far down the Trump rabbit hole, but the investors

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Speaker 1: we talked to definitely think that if things, you know,

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Speaker 1: get really shaken up in credit, then there will be

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Speaker 1: some kind of dialing back of the rhetoric or some

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Speaker 1: kind of support from the current administration to prevent too

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Speaker 1: much spread widening. I mean that's at least what we're

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Speaker 1: hearing from the buyside at the moment. I mean there's

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Speaker 1: the belief, so who knows wishable thinking it could be.

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Speaker 2: But but then again, like you know, as I think

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Speaker 2: to like this this Trump put or or you know

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Speaker 2: what you know, I think the ten year treasure yield mean,

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Speaker 2: like you said, that's the only thing that's kind of underperformed. Yeah,

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Speaker 2: this is kind of a key metric, right that that

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Speaker 2: the president as well as you know, the treasure sector

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Speaker 2: are looking at. So like, yeah, what are the mechanisms right,

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Speaker 2: like is there does there need to be like a

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Speaker 2: like management or the curve type thing or does that

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Speaker 2: mean like a weekly time to me or something? Right?

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Speaker 2: And so are aren't those things I guess more important

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Speaker 2: to I guess that the people who are kind of

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Speaker 2: running the country now versus you know what we think

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Speaker 2: of in the bond market. So do we need like

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Speaker 2: a worse economic outlook right for that to happen? Like

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Speaker 2: how do you think about those things? Or how do

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Speaker 2: you what do you talk to issuers and investors about.

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Speaker 3: He's in a difficult spot as he thinks about how

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Speaker 3: he can affect change in bond markets. I think the

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Speaker 3: hope was, the aspiration was you put some of these

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Speaker 3: you unwind some of these tariff plans, and you'd see

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Speaker 3: a course correction across asset classes. He's getting it with

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Speaker 3: the exception of the rate rate market. There's not been

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Speaker 3: any waning of demand from the international subset of investors.

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Speaker 3: Looking at the April treasure auction data, you know, I

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Speaker 3: don't know what you know, political tools he has in

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Speaker 3: hand to sort of encourage incremental participation from that buyer

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Speaker 3: base that has paired down their exposure to treasuries for

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Speaker 3: certain even though they remain you know, sort of a

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Speaker 3: trillion plus spires of credit and you know investment grade

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Speaker 3: and rates, and you know fifty percent of the exposure

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Speaker 3: they have in our market is through treasury yields. So

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Speaker 3: it's you know, I leave my head. I'm scratching my

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Speaker 3: head a bit in terms of how he's going to

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Speaker 3: affect that outcome, because I don't think he wants to

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Speaker 3: see a recession in the cards. As he thinks about

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Speaker 3: the path ahead, think he's willing to take some pain.

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Speaker 3: But I would say the markets are here again creating

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Speaker 3: some guardrails for him when he.

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Speaker 1: Talks to peign investor. When you're on the road in

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Speaker 1: your global role. Is there any kind of like questioning

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Speaker 1: around the whole concept of risk free rate when it

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Speaker 1: comes to treasuries?

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Speaker 3: Now, I've not experienced any of that. I do think

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Speaker 3: there's a willingness and a tolerance to think about credit

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Speaker 3: as sort of a pickup to those risk free rates

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Speaker 3: and finding credits that you think whether the storm irrespective

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Speaker 3: of terra if outcomes, irrespective of growth slowdown, and so

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Speaker 3: it is I think finding yield opportunities that are compelling

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Speaker 3: in that context. So hybrids is a good example of that.

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Speaker 3: You think about you know at one, but you also

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Speaker 3: think about corporate hybrids. There's been a rebirth of that issuance.

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Speaker 3: Why because the relative spread relationships are yield relationships to

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Speaker 3: what you can see in other asset classes that are

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Speaker 3: deemed to be slightly more risky. So let's look at

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Speaker 3: double b's that index is trading around six and a

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Speaker 3: half percent. You can buy six ninety coupons and ig

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Speaker 3: names if you're willing to buy them down the capital

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Speaker 3: stack on average feels like a healthy trade off and

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Speaker 3: you're seeing outside sponsorship for those order books. As a result,

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Speaker 3: we'd let a deal for an auto company, a German

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Speaker 3: auto in the hybrid markets, the largest order book of

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Speaker 3: the year in that asset class in Europe yesterday. I

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Speaker 3: think that theme will continue, and I think you're also

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Speaker 3: seeing it in the secondary market, where you're seeing investors

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Speaker 3: picking and choosing their spots, looking for down in capital trades,

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Speaker 3: but also looking for down and credit quality trades. Assuming

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Speaker 3: you're staying in that ig echelon which you think outperforms

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Speaker 3: in any of the scenarios, we can envision as we

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Speaker 3: move ahead.

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Speaker 2: And then in terms of you talked about the hybrid issuance,

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Speaker 2: I recall it the conference the utility hybrids right much

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Speaker 2: talked about, but I guess we had the news in

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Speaker 2: China in terms of their AI efficiency being being a

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Speaker 2: lot more efficient. So do you feel like that's kind

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Speaker 2: of slowed down a bit, you know, our companies, kind

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Speaker 2: of the tech companies kind of recessing kind of that

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Speaker 2: investment in that capex as well as kind of the

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Speaker 2: utilities companies being like, okay, maybe you know the demand

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Speaker 2: for extra server are necessary or what are some of

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Speaker 2: your thoughts there?

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Speaker 3: I think it's picking and choosing spots, and so yeah,

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Speaker 3: April felt like a bit of a retracement in terms

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Speaker 3: of signs of life in that asset class in particular,

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Speaker 3: but that was not necessarily I think a backing away

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Speaker 3: of a view that there were capex needs that need

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Speaker 3: to be funded, there are leverage concerns and some sectors

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Speaker 3: that need to be addressed, and that the hybrid market

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Speaker 3: presents historically compelling opportunity to access that. In the same

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Speaker 3: way we saw thirty three straight days of no long

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Speaker 3: duration supply in April, that was more about heightened uncertainty,

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Speaker 3: and so it was a willingness to be patient and

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Speaker 3: then evaluate other entry points. So our hybrid backlog is

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Speaker 3: growing as we speak, both in banks as we look

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Speaker 3: at at ones, but also on the corporate side, and

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Speaker 3: I think you'll see a broader swath of issuers and

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Speaker 3: sectors participating in that given the senior sub relationships that

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Speaker 3: have compressed to such a large degree. So yes, I

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Speaker 3: think there'll be the signs of life there. But it's

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Speaker 3: picking and choosing windows, as we say, and April just

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Speaker 3: wasn't that window.

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Speaker 2: And then should should we have to lead tables James

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Speaker 2: or not that the easy segment that the layups are done.

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Speaker 2: All right, let's go to league tables. So you know,

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Speaker 2: looking at that, it seems like Barclays is the top

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Speaker 2: you know, non US bank and the US stella market

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Speaker 2: and obviously kind of tough to crack that. But is

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Speaker 2: that kind of the goal like to to to be

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Speaker 2: that or you know, is there you know, you know,

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Speaker 2: are you looking forward to kind of cracking you know,

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Speaker 2: the even more of that top five space in the

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Speaker 2: US or are you kind of happy being with the

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Speaker 2: top non US choice here?

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Speaker 3: To me, it's about wallet share and consistent wallet share,

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Speaker 3: and it's about how do you advise clients. And Vincett

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Speaker 3: set out a new plan for us. It's a three

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Speaker 3: year plan and it's simpler, better, more balanced, and how

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Speaker 3: are we delivering solutions to clients that really hit on

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Speaker 3: those three points? So we don't we are not all

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Speaker 3: things to all clients, but where we have the right

435
00:21:25,800 --> 00:21:27,679
Speaker 3: to win, we want to be outside the box and

436
00:21:27,720 --> 00:21:30,680
Speaker 3: the way we deliver solutions and in many cases where

437
00:21:30,720 --> 00:21:34,760
Speaker 3: we're outperforming and taking wallet share in this volatility is

438
00:21:34,840 --> 00:21:38,360
Speaker 3: looking at cross currency in an agnostic way. So we

439
00:21:38,400 --> 00:21:41,000
Speaker 3: are doing trades. We did a deal for Alphabet, We

440
00:21:41,040 --> 00:21:44,000
Speaker 3: did an inaugural euro for them and came with a

441
00:21:44,119 --> 00:21:48,560
Speaker 3: US dollar exercise. Some of that is about optimizing execution outcomes.

442
00:21:48,560 --> 00:21:50,919
Speaker 3: Some of that's evaluating FX moves and where there are

443
00:21:50,960 --> 00:21:54,159
Speaker 3: opportunities for clients on both sides of the pond. Some

444
00:21:54,200 --> 00:21:57,639
Speaker 3: of its maturity tower management, some of its investor divers

445
00:21:57,760 --> 00:22:02,280
Speaker 3: creation and an uncertain market backdrop up. So increasingly I

446
00:22:02,280 --> 00:22:06,080
Speaker 3: think we are involved in this uptick in reverse Yankee activity,

447
00:22:06,240 --> 00:22:09,520
Speaker 3: so bringing US borrowers to the European market. It's now

448
00:22:09,600 --> 00:22:11,960
Speaker 3: twenty five percent of the corporate market in Europe is

449
00:22:12,040 --> 00:22:18,320
Speaker 3: driven by non European domicile companies. We are a leader

450
00:22:18,359 --> 00:22:21,560
Speaker 3: in that in part because we're back to brass tacks here.

451
00:22:21,960 --> 00:22:23,919
Speaker 3: This is not a bowl market where anyone can just

452
00:22:23,960 --> 00:22:27,320
Speaker 3: watch the screens and guide issuers effectively. It's really digging

453
00:22:27,359 --> 00:22:31,399
Speaker 3: in and getting back to relative value conversations, understanding the

454
00:22:31,440 --> 00:22:34,040
Speaker 3: evolution of the buyer base. Where on the curve do

455
00:22:34,080 --> 00:22:36,440
Speaker 3: they want to buy? That's changing by the hour, by

456
00:22:36,440 --> 00:22:40,040
Speaker 3: the day, by the week. We have a secondary market

457
00:22:40,080 --> 00:22:43,760
Speaker 3: platform that is second to none, that provides real time

458
00:22:43,760 --> 00:22:46,320
Speaker 3: insights in a way that the screens, I think belie.

459
00:22:46,480 --> 00:22:49,080
Speaker 3: I mean days that look like down equity days aren't

460
00:22:49,119 --> 00:22:53,200
Speaker 3: necessarily inactive on the new issue front. And yet you'd

461
00:22:53,200 --> 00:22:55,919
Speaker 3: be surprised how many go no go conversations we have

462
00:22:55,960 --> 00:22:59,119
Speaker 3: where that's hotly debated, even though investors continue to be

463
00:22:59,160 --> 00:23:02,280
Speaker 3: starved for assets, and so it's having a pulse of

464
00:23:02,320 --> 00:23:06,800
Speaker 3: the market looking for creative solutions and currency agnostic and

465
00:23:06,920 --> 00:23:10,280
Speaker 3: or hybrid opportunities are places we've really led the charge.

466
00:23:10,200 --> 00:23:12,760
Speaker 1: On creative solutions. A lot of investors, particularly but also

467
00:23:12,800 --> 00:23:16,720
Speaker 1: issues increasingly want private markets. How do you respond to that.

468
00:23:17,119 --> 00:23:19,720
Speaker 3: Yeah, we've viewed private markets as sort of complementary to

469
00:23:20,160 --> 00:23:22,640
Speaker 3: what we do on the public side. So we are

470
00:23:23,160 --> 00:23:27,080
Speaker 3: aligned here again trying to leverage relationships for investors that

471
00:23:27,119 --> 00:23:29,720
Speaker 3: are involved on the secondary side and the primary side.

472
00:23:30,440 --> 00:23:32,960
Speaker 3: What you're finding is that the definition of private credit

473
00:23:33,080 --> 00:23:35,760
Speaker 3: is really evolving. So it started out as sort of

474
00:23:35,800 --> 00:23:39,840
Speaker 3: a lef and concept. Increasingly, I think securitization has played

475
00:23:39,840 --> 00:23:42,280
Speaker 3: a healthy role and we'll continue to in terms of

476
00:23:42,320 --> 00:23:44,640
Speaker 3: the growth of that market. They tend to be very

477
00:23:44,680 --> 00:23:49,199
Speaker 3: bespoke transactions that are more m and a like in

478
00:23:49,240 --> 00:23:51,359
Speaker 3: the way that they're structured. There are many months, and

479
00:23:51,800 --> 00:23:55,440
Speaker 3: for us that means really operating and delivering one firm

480
00:23:55,560 --> 00:23:58,359
Speaker 3: so that our coverage partners, our M and A partners

481
00:23:58,680 --> 00:24:01,320
Speaker 3: are in the weeds alongside of debt capital markets where

482
00:24:01,359 --> 00:24:05,480
Speaker 3: we've got treasury level CFO level conversations and then sort

483
00:24:05,520 --> 00:24:08,000
Speaker 3: of trying to appeal to where that bid is emerging.

484
00:24:08,040 --> 00:24:10,280
Speaker 3: And frankly, there's not a day or week that goes

485
00:24:10,280 --> 00:24:13,200
Speaker 3: by that there are not new players stepping into the fold,

486
00:24:13,320 --> 00:24:14,920
Speaker 3: I think with a bit of fear of missing out

487
00:24:15,000 --> 00:24:19,000
Speaker 3: as the mentality. And yet these trades are bespoke, They're very,

488
00:24:19,080 --> 00:24:22,560
Speaker 3: very nuanced. It's really peeling back the layers and oftentimes

489
00:24:22,600 --> 00:24:28,360
Speaker 3: looking at subsidiary level opportunities. And so yes, we continue

490
00:24:28,359 --> 00:24:30,919
Speaker 3: to see more of that. We are invested and heavily

491
00:24:30,920 --> 00:24:34,760
Speaker 3: involved in that dialogue. But there's a reason you aren't

492
00:24:34,760 --> 00:24:37,800
Speaker 3: seeing deals hit the screens every other day. The path

493
00:24:37,880 --> 00:24:40,399
Speaker 3: and the horizon around the structuring of these trades takes

494
00:24:40,480 --> 00:24:44,359
Speaker 3: much longer than a pure play, regular public deal would.

495
00:24:44,680 --> 00:24:47,760
Speaker 3: They're also not always as cost efficient, so while liquidity

496
00:24:48,040 --> 00:24:50,800
Speaker 3: as intact as they are in the public markets, oftentimes

497
00:24:50,960 --> 00:24:53,919
Speaker 3: the better and more straightforward path is through the public channel.

498
00:24:54,200 --> 00:24:58,120
Speaker 3: Those same private ig investors are showing up in new

499
00:24:58,160 --> 00:25:01,040
Speaker 3: issues on the public side too. In many cases that's

500
00:25:01,040 --> 00:25:03,639
Speaker 3: at you know, levels that are a point or better

501
00:25:03,680 --> 00:25:06,640
Speaker 3: than they might see in the private market. So there's

502
00:25:06,760 --> 00:25:09,360
Speaker 3: room for both. It'll be a balancing act and it's

503
00:25:09,400 --> 00:25:14,159
Speaker 3: about tailoring solutions, I think, very very specific instances to

504
00:25:14,280 --> 00:25:16,400
Speaker 3: build that asset class on the side.

505
00:25:16,520 --> 00:25:17,879
Speaker 1: Do you think that will get to the point that

506
00:25:18,000 --> 00:25:20,520
Speaker 1: some time in the future, in the future that the

507
00:25:20,560 --> 00:25:24,640
Speaker 1: deal like a frequent issuer will take a private loan

508
00:25:24,720 --> 00:25:27,480
Speaker 1: instead of a public bond. Is there going to be

509
00:25:27,520 --> 00:25:29,760
Speaker 1: a time when that becomes more cost effective? And there's

510
00:25:29,760 --> 00:25:32,040
Speaker 1: so much competition, there's so much cash out there to

511
00:25:32,160 --> 00:25:35,360
Speaker 1: lend these companies, why wouldn't it become much cheaper and

512
00:25:35,800 --> 00:25:37,080
Speaker 1: ultimately replace the bonds.

513
00:25:37,359 --> 00:25:39,720
Speaker 3: Yeah, I mean, because there is such breadth and depth

514
00:25:39,760 --> 00:25:41,680
Speaker 3: to you know, an eight and a half trillion dollar

515
00:25:41,760 --> 00:25:45,119
Speaker 3: IG market and dollars. You know, if you look at

516
00:25:45,240 --> 00:25:48,439
Speaker 3: order books we saw on we brought deals yesterday for

517
00:25:48,520 --> 00:25:51,560
Speaker 3: cat in Deier, both of them saw outside sponsorship some

518
00:25:51,600 --> 00:25:54,680
Speaker 3: of the larger largest order books they've ever ever garnered

519
00:25:55,760 --> 00:25:58,480
Speaker 3: at levels that are at negative new issue concessions relative

520
00:25:58,520 --> 00:26:02,159
Speaker 3: to their secondaries, and so public markets are leading the

521
00:26:02,240 --> 00:26:05,879
Speaker 3: charge in terms of repricing. We're moving so quickly with

522
00:26:06,200 --> 00:26:09,480
Speaker 3: the headline flow that we're dealing with that you know,

523
00:26:09,720 --> 00:26:13,800
Speaker 3: new issue markets on the public side set transparency, legitimize

524
00:26:13,800 --> 00:26:17,520
Speaker 3: fair value, and create anchor points for those private conversations

525
00:26:17,520 --> 00:26:19,239
Speaker 3: to follow. So here again, I think it is a

526
00:26:19,320 --> 00:26:23,639
Speaker 3: complimentary dynamic. But the breadth and depth, you know, is

527
00:26:23,720 --> 00:26:26,040
Speaker 3: just speaking to that Kat. Yesterday, if you look at

528
00:26:26,040 --> 00:26:29,439
Speaker 3: captive finance deals, they typically have somewhere between seventy and

529
00:26:29,440 --> 00:26:31,760
Speaker 3: one hundred and thirty accounts in the book. Yesterday, we

530
00:26:31,800 --> 00:26:35,120
Speaker 3: had upwards of two hundred investors distinct orders in that.

531
00:26:35,520 --> 00:26:40,119
Speaker 3: So there's more cash piling into public markets that is

532
00:26:40,440 --> 00:26:43,639
Speaker 3: competing with and providing price tension in a way that

533
00:26:43,680 --> 00:26:46,640
Speaker 3: the private markets with a more concentrated subset of investors

534
00:26:46,640 --> 00:26:47,520
Speaker 3: doesn't always afford.

535
00:26:48,359 --> 00:26:50,679
Speaker 2: Got okay, you brought up an interesting point on the

536
00:26:50,760 --> 00:26:53,480
Speaker 2: increased demand I guess for corporate bonds. So you know,

537
00:26:53,600 --> 00:26:56,600
Speaker 2: when I talk to clients and then I mentioned now

538
00:26:56,600 --> 00:26:59,080
Speaker 2: I'm going to talk to somebody in DCM on a podcast.

539
00:26:59,520 --> 00:27:01,480
Speaker 2: You know, within the first like minute or so, I

540
00:27:01,480 --> 00:27:04,200
Speaker 2: get the joke, Oh yeah, how do I get better allocations? Right?

541
00:27:04,240 --> 00:27:06,960
Speaker 2: And so you know what is kind of that that

542
00:27:06,960 --> 00:27:08,520
Speaker 2: that you know? I guess you know the bigger players,

543
00:27:08,560 --> 00:27:10,960
Speaker 2: you always deal with them, they know what's going on

544
00:27:11,000 --> 00:27:13,040
Speaker 2: and stuff. But maybe to some of these, like new

545
00:27:13,080 --> 00:27:15,919
Speaker 2: accounts or some of these, you know, smaller sized firms,

546
00:27:16,160 --> 00:27:17,800
Speaker 2: what would you say to them, you know, in terms

547
00:27:17,800 --> 00:27:20,320
Speaker 2: of like when they when when? I guess nobody's people

548
00:27:20,320 --> 00:27:21,880
Speaker 2: are going to be afraid to ask you, but I'll

549
00:27:21,880 --> 00:27:23,720
Speaker 2: ask it. Now, how do they get better allocation?

550
00:27:23,800 --> 00:27:26,879
Speaker 3: Well, they ask all the time. You don't always make friends.

551
00:27:26,880 --> 00:27:29,160
Speaker 3: Having led the global syndicate business for a while, you're

552
00:27:29,160 --> 00:27:32,440
Speaker 3: striking the balance between the issuers and investors and trying

553
00:27:32,440 --> 00:27:35,400
Speaker 3: to walk a fine line in terms of the end outcome.

554
00:27:35,680 --> 00:27:37,800
Speaker 3: And if you get it right, it's very transparent in

555
00:27:37,800 --> 00:27:40,000
Speaker 3: the secondary market as well, so you know, if you

556
00:27:40,160 --> 00:27:43,080
Speaker 3: if you priced it and placed it efficiently. I think

557
00:27:43,080 --> 00:27:46,920
Speaker 3: what is important and what we're increasingly seeing is going

558
00:27:46,960 --> 00:27:50,120
Speaker 3: back to thought leadership, and so Barkleay's is I think

559
00:27:50,240 --> 00:27:54,000
Speaker 3: uniquely positioned here. We've invested in our research franchise in

560
00:27:54,040 --> 00:27:55,919
Speaker 3: a way that others over the past few years have

561
00:27:56,000 --> 00:27:59,679
Speaker 3: really backed away from. But we think actually fundamental relative

562
00:27:59,760 --> 00:28:04,720
Speaker 3: value conversations digging into the credit story and affording an

563
00:28:04,760 --> 00:28:08,240
Speaker 3: ability to differentiate. There's been no dispersion investment Greek credit

564
00:28:08,280 --> 00:28:10,000
Speaker 3: now for the better part of the last two years.

565
00:28:10,040 --> 00:28:12,840
Speaker 3: That dispersion is starting to pick up. It's picking winners

566
00:28:12,840 --> 00:28:14,960
Speaker 3: and losers. If you're going to generate alpha in this

567
00:28:15,080 --> 00:28:17,600
Speaker 3: market as an investor, you need to pick and choose

568
00:28:17,600 --> 00:28:20,560
Speaker 3: your spots. It's not broad based buying of any given sector.

569
00:28:20,640 --> 00:28:23,240
Speaker 3: It's not broad based buying of any given part of

570
00:28:23,280 --> 00:28:25,919
Speaker 3: the curve. It's really picking and choosing your spots. So

571
00:28:25,960 --> 00:28:28,959
Speaker 3: how do you do that effectively? We are holding sector

572
00:28:29,000 --> 00:28:33,439
Speaker 3: specific conferences and asset specific conferences to help generate dialogue

573
00:28:33,480 --> 00:28:36,080
Speaker 3: and bring issuers and investors together in a room to

574
00:28:36,160 --> 00:28:40,280
Speaker 3: have those conversations as a precursor. There's real value add

575
00:28:40,320 --> 00:28:44,040
Speaker 3: to investors in providing feedback on the heels of those discussions,

576
00:28:44,120 --> 00:28:46,200
Speaker 3: and we're finding it playing out in the room. Some

577
00:28:46,320 --> 00:28:49,240
Speaker 3: of the private ig ideas are coming out of those

578
00:28:50,280 --> 00:28:53,640
Speaker 3: one on one discussions. We've got a healthcare conference coming

579
00:28:53,680 --> 00:28:56,040
Speaker 3: up in May. We've got a TMT conference coming up

580
00:28:56,080 --> 00:29:01,200
Speaker 3: in May. We just held a hybrid corporate in the US.

581
00:29:01,840 --> 00:29:05,200
Speaker 3: We have one in Europe. Also, there's an Investment Grade

582
00:29:05,200 --> 00:29:07,840
Speaker 3: Conference in June. I mean, it is fundamental to how

583
00:29:07,840 --> 00:29:11,880
Speaker 3: we try to approach differentiating thought content, but also affording

584
00:29:11,920 --> 00:29:15,720
Speaker 3: investors and opportunity to stand out, to provide unique ideas,

585
00:29:15,720 --> 00:29:17,840
Speaker 3: and to be price leaders as they think about the

586
00:29:17,920 --> 00:29:20,640
Speaker 3: relative value build. And so the investors that do that

587
00:29:20,760 --> 00:29:24,640
Speaker 3: tend to be treated more favorably, if only because issuers

588
00:29:24,680 --> 00:29:28,800
Speaker 3: then really value the thought leadership that that im vibes

589
00:29:28,840 --> 00:29:32,520
Speaker 3: and I think helpful in terms of broadening their footprint.

590
00:29:33,160 --> 00:29:36,400
Speaker 3: You're seeing US issuers go to the European market in

591
00:29:36,440 --> 00:29:39,760
Speaker 3: part to expand their footprint and to diversify that investor base.

592
00:29:39,800 --> 00:29:44,280
Speaker 3: It's become much less concentrated, so it's incredibly well valued.

593
00:29:44,320 --> 00:29:46,040
Speaker 3: And if you're new to a name and you've really

594
00:29:46,080 --> 00:29:49,160
Speaker 3: dug in and they're going to follow it, that tends

595
00:29:49,160 --> 00:29:51,600
Speaker 3: to benefit those investors in that way. So I'm not

596
00:29:51,640 --> 00:29:53,720
Speaker 3: sure that fully answers your question, but I think it's

597
00:29:53,760 --> 00:29:56,240
Speaker 3: a path to better outcomes for some clients.

598
00:29:56,360 --> 00:29:59,440
Speaker 2: Yeah, I think that's fair. And then it's always hard

599
00:29:59,440 --> 00:30:01,640
Speaker 2: to write, and then and then sometimes you get the weight.

600
00:30:01,680 --> 00:30:04,080
Speaker 2: I got this much allocation, what's wrong on my hat?

601
00:30:04,200 --> 00:30:07,040
Speaker 2: You know, everybody's always unhappy and I guess it's trying

602
00:30:07,080 --> 00:30:08,280
Speaker 2: to manage that that It makes.

603
00:30:08,160 --> 00:30:09,800
Speaker 1: You wonder about the order book. Is it all padding?

604
00:30:09,920 --> 00:30:10,040
Speaker 3: Is it?

605
00:30:10,200 --> 00:30:11,840
Speaker 1: Is it real orders when it's you know, eight and

606
00:30:11,840 --> 00:30:14,400
Speaker 1: a half billion dollars for five hundred million dollar day.

607
00:30:14,240 --> 00:30:16,040
Speaker 3: And it's a combination of the two, right, I mean,

608
00:30:16,080 --> 00:30:17,960
Speaker 3: but we know, we know the players, we know how

609
00:30:17,960 --> 00:30:21,480
Speaker 3: they operate. It is a bull market, so there's always

610
00:30:21,480 --> 00:30:24,920
Speaker 3: some posturing around them. It's the syndicates job to decode that.

611
00:30:25,120 --> 00:30:26,720
Speaker 3: What do people really want? What are they going to

612
00:30:26,800 --> 00:30:28,960
Speaker 3: do with those bonds on the follow are they at

613
00:30:29,000 --> 00:30:31,560
Speaker 3: on buyers on the break? Are they long term holders?

614
00:30:31,920 --> 00:30:34,760
Speaker 3: It's not one size fits all, and so it's why

615
00:30:34,880 --> 00:30:37,040
Speaker 3: I think we also spend a lot of time even

616
00:30:37,040 --> 00:30:39,680
Speaker 3: though we're advising issuers to the market and talking to

617
00:30:39,760 --> 00:30:42,520
Speaker 3: CFOs and they're trying to convince their boards when to

618
00:30:42,560 --> 00:30:46,360
Speaker 3: go and why really, I think you know, understanding that

619
00:30:46,480 --> 00:30:50,920
Speaker 3: investor piece is critical to getting it right. So, yes,

620
00:30:51,680 --> 00:30:54,840
Speaker 3: it speaks to the scarcity of assets, relatively amount of

621
00:30:54,840 --> 00:30:56,160
Speaker 3: cash that continues to flood in.

622
00:30:56,840 --> 00:30:59,080
Speaker 2: And then in terms of this new issuance process, I mean,

623
00:30:59,120 --> 00:31:01,600
Speaker 2: I guess maybe around COVID where we got to this

624
00:31:01,720 --> 00:31:04,640
Speaker 2: guidance plus or minus five or whatnot. So but then

625
00:31:04,720 --> 00:31:07,200
Speaker 2: you know, I have complaints that I hear from investors

626
00:31:07,440 --> 00:31:11,240
Speaker 2: is if we already know on a us IG deal

627
00:31:11,360 --> 00:31:14,080
Speaker 2: everything's going to tighten twenty five thirty BIPs, why don't

628
00:31:14,120 --> 00:31:16,480
Speaker 2: we just get there? You know, like, well, why can't

629
00:31:16,520 --> 00:31:18,080
Speaker 2: we cut the time? And you know kind of do

630
00:31:18,240 --> 00:31:22,000
Speaker 2: like a guidance maybe two to five wider than you

631
00:31:22,000 --> 00:31:24,840
Speaker 2: know existing. So can you talk to that? You know,

632
00:31:24,960 --> 00:31:27,200
Speaker 2: why do we need to go through this song and dance?

633
00:31:27,240 --> 00:31:29,240
Speaker 3: I love I love that question. Some of this is

634
00:31:29,280 --> 00:31:32,520
Speaker 3: that the sheer growth of the investment grade market and

635
00:31:32,560 --> 00:31:35,040
Speaker 3: the amount of supply that's coming in any given day.

636
00:31:35,080 --> 00:31:36,880
Speaker 3: So if two thirds of supply are coming in five

637
00:31:36,960 --> 00:31:39,080
Speaker 3: days in a month, it's a lot of supply. When

638
00:31:39,120 --> 00:31:42,960
Speaker 3: you're seeing one hundred billion plus months, is the norm

639
00:31:43,600 --> 00:31:47,440
Speaker 3: coming through the pipes? We have electronified our book building

640
00:31:47,480 --> 00:31:52,520
Speaker 3: platforms to sort of provide efficiency of execution, getting in

641
00:31:52,560 --> 00:31:55,040
Speaker 3: and out of the market as quickly as possible. It's

642
00:31:55,080 --> 00:31:57,960
Speaker 3: come a long way. Sure, there's more more room to

643
00:31:58,040 --> 00:32:02,320
Speaker 3: run there now more important than ever to try to

644
00:32:02,360 --> 00:32:05,600
Speaker 3: minimize your exposure to markets. It's why you're seeing activity

645
00:32:05,680 --> 00:32:08,120
Speaker 3: on CPI days or seven deals in the market today.

646
00:32:08,240 --> 00:32:11,280
Speaker 3: I mean historically CPI days if you're concerned about inflation

647
00:32:11,560 --> 00:32:14,240
Speaker 3: was a non starter. Pencils down, wait out until the

648
00:32:14,280 --> 00:32:16,800
Speaker 3: next window. Last week as a FED week was the

649
00:32:16,840 --> 00:32:19,400
Speaker 3: most active FED week I think going back to twenty twenty.

650
00:32:20,400 --> 00:32:22,600
Speaker 3: Those are known quantums at the moment, or at least

651
00:32:22,600 --> 00:32:24,760
Speaker 3: so the unknown knowns. You think you know what outcomes

652
00:32:24,760 --> 00:32:27,880
Speaker 3: are around the data as we move ahead. What you

653
00:32:27,960 --> 00:32:30,840
Speaker 3: don't know is where the Twitter feed or the x

654
00:32:30,920 --> 00:32:34,240
Speaker 3: feed might derail things as you move throughout the day.

655
00:32:34,360 --> 00:32:37,440
Speaker 3: So getting in and out as quickly as possible, I

656
00:32:37,440 --> 00:32:39,920
Speaker 3: think is proving to be the new norm and moving

657
00:32:39,960 --> 00:32:42,800
Speaker 3: straight to launch if there's conviction around the clearing levels

658
00:32:42,800 --> 00:32:46,040
Speaker 3: has been the faster path to think taking an hour

659
00:32:46,120 --> 00:32:48,560
Speaker 3: out of that new issue exercise. So where we used

660
00:32:48,560 --> 00:32:51,240
Speaker 3: to price after four, now we're pricing many times before

661
00:32:51,240 --> 00:32:54,480
Speaker 3: two or two thirty in the afternoon. So we're continuing

662
00:32:54,480 --> 00:32:56,240
Speaker 3: to get better. We're out of the dark ages now

663
00:32:56,240 --> 00:32:59,760
Speaker 3: with some of the technology that exists. But I think

664
00:32:59,760 --> 00:33:02,920
Speaker 3: that extra step when you've got confidence around clearing level

665
00:33:03,160 --> 00:33:07,440
Speaker 3: felt unnecessary in COVID and here again in today's more

666
00:33:07,520 --> 00:33:08,760
Speaker 3: volatile backdrop.

667
00:33:08,800 --> 00:33:10,840
Speaker 1: It's not not a science. But can you talk a

668
00:33:10,880 --> 00:33:12,960
Speaker 1: bit about the pipeline megan in terms of, you know,

669
00:33:12,960 --> 00:33:18,600
Speaker 1: what's the opportunity for new deals. I've heard about the

670
00:33:18,680 --> 00:33:21,480
Speaker 1: commercial paper trade turning out there's definitely a bit of duration.

671
00:33:22,000 --> 00:33:23,680
Speaker 1: What's that all about, Yeah, that's right.

672
00:33:23,840 --> 00:33:26,440
Speaker 3: I think there was a bridge. So this volatility all

673
00:33:26,600 --> 00:33:29,640
Speaker 3: picked up right into corporate earnings blackouts, which are self

674
00:33:29,640 --> 00:33:32,480
Speaker 3: imposed windows where these barrowers actually can't come to market.

675
00:33:32,680 --> 00:33:35,200
Speaker 3: So as the market started to rebound, they were actually

676
00:33:35,760 --> 00:33:39,320
Speaker 3: precluded from moving forward. And the CP market provided a

677
00:33:39,480 --> 00:33:42,840
Speaker 3: very functional you know, the pipes all work, you're able

678
00:33:42,840 --> 00:33:45,600
Speaker 3: to source liquidity, and it was a bridge to when

679
00:33:45,720 --> 00:33:48,440
Speaker 3: is the next viable window, which was an uncertain I mean,

680
00:33:48,520 --> 00:33:50,840
Speaker 3: no one expected the announcements over the weekend, no one

681
00:33:50,920 --> 00:33:54,120
Speaker 3: was positioned for it. We are seeing it had seen

682
00:33:54,200 --> 00:33:56,600
Speaker 3: sort of one hundred billion increase in terms of CP

683
00:33:56,720 --> 00:34:01,600
Speaker 3: outstandings as a response to that. Now that they're at

684
00:34:01,600 --> 00:34:06,600
Speaker 3: it that yeah, that's since Liberation days and an increase

685
00:34:07,680 --> 00:34:10,319
Speaker 3: for a month. It is, and it's and it was

686
00:34:10,360 --> 00:34:13,400
Speaker 3: digested incredibly efficiently. I think the whams on those extended.

687
00:34:13,960 --> 00:34:16,280
Speaker 3: What we're seeing now is that we're twenty to thirty

688
00:34:16,280 --> 00:34:19,080
Speaker 3: billion off the peak of those numbers. Why new issue

689
00:34:19,080 --> 00:34:22,440
Speaker 3: markets are functional. New issue concessions have dropped back down

690
00:34:22,520 --> 00:34:25,560
Speaker 3: to zero to negative. We had peaked at seventeen basis

691
00:34:25,600 --> 00:34:29,239
Speaker 3: points over. Subscription levels are increasing, So the access to

692
00:34:29,320 --> 00:34:32,560
Speaker 3: that market in an efficient way means barers are turning

693
00:34:32,600 --> 00:34:34,520
Speaker 3: out that CP and you're seeing that in a lot

694
00:34:34,520 --> 00:34:36,399
Speaker 3: of the stated use of proceeds that we've seen.

695
00:34:36,440 --> 00:34:38,719
Speaker 1: Okay, and that market is liquid, the exen it can

696
00:34:38,760 --> 00:34:41,640
Speaker 1: flip on and off like that at that size very quickly.

697
00:34:41,680 --> 00:34:44,080
Speaker 3: Very easily. It's a money market investor base. A lot

698
00:34:44,120 --> 00:34:46,919
Speaker 3: of it is short data debt, so it's overnights, one week,

699
00:34:47,040 --> 00:34:51,480
Speaker 3: one month maturities, and so the balances can be lofty.

700
00:34:51,520 --> 00:34:54,560
Speaker 3: I mean we've seen some some issuers increase to seven

701
00:34:54,560 --> 00:34:57,520
Speaker 3: to ten billion dollars outstanding. You can easily turn that

702
00:34:57,560 --> 00:35:00,279
Speaker 3: out of the market today in an efficient way because.

703
00:35:00,040 --> 00:35:02,560
Speaker 1: We've got a whole load of you know, potential more

704
00:35:02,640 --> 00:35:05,480
Speaker 1: volatility coming through tax reform, immigration reform, all the other

705
00:35:05,520 --> 00:35:08,000
Speaker 1: things that the current administration wants to do. So CP

706
00:35:08,120 --> 00:35:10,480
Speaker 1: is kind of a backstop. It's a kind of it

707
00:35:10,520 --> 00:35:11,960
Speaker 1: is a safety valve, safety valvey.

708
00:35:12,160 --> 00:35:15,000
Speaker 3: Yeah, and really there are some borrowers who've turned out

709
00:35:15,800 --> 00:35:18,319
Speaker 3: and are willing to wait until Q three. They want

710
00:35:18,360 --> 00:35:20,879
Speaker 3: to see a longer string of stability. So there's some

711
00:35:21,200 --> 00:35:23,800
Speaker 3: jumping right into this window. We've seen seventy five billion

712
00:35:23,840 --> 00:35:25,880
Speaker 3: in the first week in May. There are others that

713
00:35:25,920 --> 00:35:28,520
Speaker 3: are going to be tempered in terms of how they evaluate.

714
00:35:28,600 --> 00:35:31,759
Speaker 3: They want more certainty around TARORF outcomes, particularly if they're

715
00:35:31,800 --> 00:35:34,279
Speaker 3: directly impacted before they before they move.

716
00:35:34,719 --> 00:35:36,799
Speaker 1: What's an average CP deal that like, just for our

717
00:35:36,800 --> 00:35:38,960
Speaker 1: listeners who don't really know that market, is it a

718
00:35:39,040 --> 00:35:42,480
Speaker 1: like a billion dollar one month transaction? What's the size

719
00:35:42,480 --> 00:35:43,000
Speaker 1: and scope?

720
00:35:43,480 --> 00:35:46,279
Speaker 3: It is a broad and deep market, but it is

721
00:35:46,360 --> 00:35:49,080
Speaker 3: it tends to be a laddered maturity profile, so you'll

722
00:35:49,080 --> 00:35:51,960
Speaker 3: get overnights rolling every single day. It's why we call

723
00:35:51,960 --> 00:35:54,959
Speaker 3: them CP traders. They actually are actively trading a lot

724
00:35:55,000 --> 00:35:58,000
Speaker 3: of size, but very short dated. So I would say

725
00:35:58,280 --> 00:36:00,759
Speaker 3: whams you know, tend to be sort of one week,

726
00:36:00,880 --> 00:36:03,400
Speaker 3: one month. You have seen some extension of that out

727
00:36:03,480 --> 00:36:07,080
Speaker 3: to three months. In very volatile periods, you see some

728
00:36:07,200 --> 00:36:09,560
Speaker 3: turning out to one year. I think everyone feels like

729
00:36:09,600 --> 00:36:13,040
Speaker 3: some of this volatility is short lived, and so we're

730
00:36:13,080 --> 00:36:17,319
Speaker 3: seeing some extension, but not in a market way. So

731
00:36:17,520 --> 00:36:20,879
Speaker 3: you know, yes, there are high quality borrowers Tier one

732
00:36:20,920 --> 00:36:24,759
Speaker 3: borrowers with CP balances now that are running at seven

733
00:36:24,840 --> 00:36:29,040
Speaker 3: to ten billion as a regular course and doing that efficiently.

734
00:36:29,280 --> 00:36:31,000
Speaker 1: And when did you last see that kind of situation

735
00:36:31,080 --> 00:36:31,680
Speaker 1: in this market?

736
00:36:32,320 --> 00:36:35,200
Speaker 3: Well, there were concerns when volatility got very bad, was

737
00:36:35,200 --> 00:36:37,399
Speaker 3: that liquid going to dry up? They are the most

738
00:36:37,440 --> 00:36:39,920
Speaker 3: conservative investors on the market, so there was an up

739
00:36:39,920 --> 00:36:42,680
Speaker 3: in quality bid There was no challenge to sort of

740
00:36:42,680 --> 00:36:45,799
Speaker 3: double a single A issuers accessing that market. But you

741
00:36:45,840 --> 00:36:48,960
Speaker 3: did see some caution around tier two borrowers. It was

742
00:36:48,960 --> 00:36:51,920
Speaker 3: a blip on the radar. It lasted a day I

743
00:36:51,960 --> 00:36:55,000
Speaker 3: lived through. I was trading CP during the financial crisis,

744
00:36:55,000 --> 00:36:59,080
Speaker 3: the Lehman bankruptcy. You know, the cracks start to emerge

745
00:36:59,080 --> 00:37:01,920
Speaker 3: there first, because they are the most conservative investors in

746
00:37:01,960 --> 00:37:04,920
Speaker 3: our market, and so as long as they are orderly

747
00:37:04,960 --> 00:37:07,600
Speaker 3: and functional. The increase of CP in and of itself

748
00:37:07,680 --> 00:37:09,960
Speaker 3: is an anomaly.

749
00:37:10,160 --> 00:37:12,640
Speaker 1: But the CPECE spike we've seen was it as big

750
00:37:12,680 --> 00:37:14,479
Speaker 1: as the one we saw in COVID or is it.

751
00:37:14,680 --> 00:37:16,920
Speaker 3: Oh to a far lesser degree? I mean enough to

752
00:37:17,760 --> 00:37:19,680
Speaker 3: take note. It is the first place we look to

753
00:37:19,719 --> 00:37:22,640
Speaker 3: say what's the health of the market and is there

754
00:37:22,680 --> 00:37:25,120
Speaker 3: an opportunity for investors if they needed it to hide

755
00:37:25,120 --> 00:37:27,400
Speaker 3: out there, And the answer was definitively yes.

756
00:37:27,960 --> 00:37:30,560
Speaker 2: And then in terms of I think you mentioned a

757
00:37:30,640 --> 00:37:33,360
Speaker 2: lot of the self funders or whatnot kind of pulling

758
00:37:33,400 --> 00:37:36,680
Speaker 2: forward kind of the issuance. But I mean with with

759
00:37:36,840 --> 00:37:39,360
Speaker 2: I think the treating being a lot more active than expected,

760
00:37:39,840 --> 00:37:41,840
Speaker 2: do you feel like it's not just a pull forward,

761
00:37:41,880 --> 00:37:45,320
Speaker 2: but maybe do you think the expectations for annual issues

762
00:37:45,640 --> 00:37:47,520
Speaker 2: do you think that might also go up as well?

763
00:37:47,880 --> 00:37:50,359
Speaker 3: I think with deregulation, we actually think bank funding needs

764
00:37:50,360 --> 00:37:53,719
Speaker 3: have lowered, and so most banks I'm talking to are

765
00:37:54,000 --> 00:37:57,000
Speaker 3: forty fifty sixty percent of the way through their funding

766
00:37:57,000 --> 00:37:59,040
Speaker 3: needs for the year. Some of the US regionals are

767
00:37:59,080 --> 00:38:01,160
Speaker 3: almost close to a hundred percent done for the year,

768
00:38:01,560 --> 00:38:03,880
Speaker 3: all sort of taking a bird in hand with spreads

769
00:38:03,920 --> 00:38:06,400
Speaker 3: at all time tights or close to all time tights.

770
00:38:06,719 --> 00:38:09,360
Speaker 3: As spread focused borrowers, the banks have been first to

771
00:38:09,360 --> 00:38:12,279
Speaker 3: sort of step in. We're advising our own treasury team

772
00:38:12,320 --> 00:38:14,200
Speaker 3: to continue to stay the course and follow in a

773
00:38:14,239 --> 00:38:17,480
Speaker 3: similar pattern. So we are well through our funding needs.

774
00:38:17,480 --> 00:38:19,360
Speaker 3: I think more than halfway through our funding needs for

775
00:38:19,400 --> 00:38:22,520
Speaker 3: the year as well. That feels prudent because none of

776
00:38:22,600 --> 00:38:25,000
Speaker 3: us have a crystal ball. The second half is now

777
00:38:25,040 --> 00:38:27,400
Speaker 3: going to be around tax policy and the deficit, so

778
00:38:27,440 --> 00:38:30,000
Speaker 3: there's more volatility to come. I think we've walked back

779
00:38:30,040 --> 00:38:32,120
Speaker 3: from the cliff's edge, but we're not in the clear

780
00:38:32,320 --> 00:38:33,120
Speaker 3: just yet.

781
00:38:33,719 --> 00:38:35,319
Speaker 1: Are you seeing any evidence I know we've talked about

782
00:38:35,320 --> 00:38:37,399
Speaker 1: this earlier in the call, that any evidence at all

783
00:38:37,440 --> 00:38:39,880
Speaker 1: that there is this kind of rotation out of US

784
00:38:39,920 --> 00:38:41,000
Speaker 1: into Europe.

785
00:38:41,160 --> 00:38:44,000
Speaker 3: I have not seen that. I think over time that's

786
00:38:44,000 --> 00:38:46,240
Speaker 3: a multi year trend. As you look at hedging costs.

787
00:38:46,280 --> 00:38:48,920
Speaker 3: Maybe Asia is underweight to Europe at the moment. So

788
00:38:49,040 --> 00:38:52,560
Speaker 3: as I think about Japanese investment or Taiwanese investment, I

789
00:38:52,600 --> 00:38:54,879
Speaker 3: do think over a multi year period you could see

790
00:38:54,880 --> 00:38:58,960
Speaker 3: them leaning more into the Euro market just for diversification.

791
00:38:59,080 --> 00:39:03,200
Speaker 3: They are overweight US, and so volatility proves anything is

792
00:39:03,239 --> 00:39:05,560
Speaker 3: people want to be diversified, and so that's true for

793
00:39:05,600 --> 00:39:08,279
Speaker 3: issuers as we've seen on the new issue side of things,

794
00:39:08,280 --> 00:39:10,040
Speaker 3: but that will be true for the buyside as well.

795
00:39:10,080 --> 00:39:12,400
Speaker 3: But it doesn't at the moment feel like that's a

796
00:39:12,600 --> 00:39:16,080
Speaker 3: removal of assets in the US to redeploy it just

797
00:39:16,160 --> 00:39:19,320
Speaker 3: means on a go four basis inflows might be deployed

798
00:39:19,320 --> 00:39:21,439
Speaker 3: there in a more balanced way.

799
00:39:21,880 --> 00:39:23,400
Speaker 2: Is that. I don't know if we allowed to talk

800
00:39:23,400 --> 00:39:24,720
Speaker 2: about yes anymore.

801
00:39:24,320 --> 00:39:27,239
Speaker 3: But like we do it Barkleys, we double down on

802
00:39:27,280 --> 00:39:28,840
Speaker 3: it as others have backed away.

803
00:39:28,840 --> 00:39:30,839
Speaker 2: The widening of that umbrella, and yeah, maybe you can

804
00:39:30,880 --> 00:39:32,879
Speaker 2: talk a little bit about that. You know, the isguy

805
00:39:32,920 --> 00:39:34,160
Speaker 2: space I mean.

806
00:39:34,440 --> 00:39:37,280
Speaker 3: It for you know, without question, I think has become

807
00:39:37,640 --> 00:39:40,719
Speaker 3: less of a relevant focus for US borrowers in part

808
00:39:40,760 --> 00:39:43,080
Speaker 3: because it's speed to market. I mean setting up ESG,

809
00:39:43,280 --> 00:39:46,560
Speaker 3: documentation and third party opinions takes time, so if you

810
00:39:46,880 --> 00:39:49,520
Speaker 3: have fleeting windows that come and go. A lot of

811
00:39:49,840 --> 00:39:53,000
Speaker 3: US borrowers have said just from you know, speed to market,

812
00:39:53,200 --> 00:39:55,279
Speaker 3: it's been a challenging decision to make to go down

813
00:39:55,320 --> 00:39:57,959
Speaker 3: the green path, but we just did this Volkswagen Green

814
00:39:58,040 --> 00:40:02,040
Speaker 3: Hybrid deal yesterday. The utility space in the US continues

815
00:40:02,080 --> 00:40:04,640
Speaker 3: to be looking at this as an opportunity and an

816
00:40:04,640 --> 00:40:08,280
Speaker 3: investment they want to make. But it's fundamental to our commitments.

817
00:40:08,400 --> 00:40:10,160
Speaker 3: We didn't have any clauses to back out of it.

818
00:40:10,239 --> 00:40:13,799
Speaker 3: We remain committed to it as something we think is

819
00:40:13,960 --> 00:40:17,040
Speaker 3: important and fundamental to how we are going to serve clients,

820
00:40:17,320 --> 00:40:21,200
Speaker 3: and in Europe it's fairly prescriptive. There isn't anybody who's

821
00:40:21,239 --> 00:40:24,839
Speaker 3: really backing away. ESG is topical, it's cross sectors, it's

822
00:40:24,840 --> 00:40:28,239
Speaker 3: across regions, and investors really think about it as an

823
00:40:28,280 --> 00:40:31,640
Speaker 3: investment strategy too. So some of bringing us borrowers to

824
00:40:31,680 --> 00:40:33,960
Speaker 3: the European market, why we're well suited to that is

825
00:40:34,000 --> 00:40:36,840
Speaker 3: that ESG, even if it's not an ESG labeled or

826
00:40:36,880 --> 00:40:39,680
Speaker 3: stated use to proceeds transaction is still part of the

827
00:40:39,719 --> 00:40:42,279
Speaker 3: diligence and the relative value conversation for many of the

828
00:40:42,280 --> 00:40:44,720
Speaker 3: investors that think about where are they going to deploy

829
00:40:44,760 --> 00:40:45,360
Speaker 3: their cash.

830
00:40:45,680 --> 00:40:48,200
Speaker 1: So, going back to where we started making, spreads are

831
00:40:48,400 --> 00:40:51,680
Speaker 1: too tight compared to the risk out there. Although you

832
00:40:51,680 --> 00:40:53,719
Speaker 1: don't expect recession and you don't see much of a

833
00:40:53,800 --> 00:40:57,439
Speaker 1: trump put where should spreads end up this year?

834
00:40:58,320 --> 00:41:01,399
Speaker 3: Our strategists have been calling for one twenty one twenty five,

835
00:41:01,440 --> 00:41:03,520
Speaker 3: which we be pricing in about a twenty percent chance

836
00:41:03,560 --> 00:41:07,280
Speaker 3: of recession. I would be surprised if we weren't reevaluating

837
00:41:07,320 --> 00:41:09,479
Speaker 3: that in the context of the developments in the last

838
00:41:09,480 --> 00:41:12,640
Speaker 3: forty eight hours. I also think that there will be

839
00:41:12,719 --> 00:41:16,040
Speaker 3: mitigans to that. So if we are undersupplied, if we

840
00:41:16,080 --> 00:41:19,920
Speaker 3: are still seeing cash rotation into investment grade, both that

841
00:41:20,120 --> 00:41:25,319
Speaker 3: coupon income, the record COVID maturities, all of that sort

842
00:41:25,360 --> 00:41:29,040
Speaker 3: of needing to get reinvested back in investment grade credit

843
00:41:29,400 --> 00:41:32,600
Speaker 3: at a time when inflows have now rebounded. The confluence

844
00:41:32,600 --> 00:41:34,720
Speaker 3: of those events sort of creates, you know, the stars

845
00:41:34,719 --> 00:41:37,799
Speaker 3: aligning in a way that I think will curtail that

846
00:41:37,880 --> 00:41:41,239
Speaker 3: spread widening. Even if our strategy's current view is sort

847
00:41:41,280 --> 00:41:44,279
Speaker 3: of won twenty twenty five as a potential outcome over

848
00:41:44,320 --> 00:41:47,040
Speaker 3: the next six months, much of this is tied to

849
00:41:47,080 --> 00:41:49,480
Speaker 3: the economy. If we don't see an economic slowdown, if

850
00:41:49,520 --> 00:41:52,799
Speaker 3: that's much more measured, then that six months might get

851
00:41:52,880 --> 00:41:55,880
Speaker 3: you know, turned out in terms of how long it

852
00:41:55,920 --> 00:41:57,520
Speaker 3: takes for widening to materialize.

853
00:41:57,560 --> 00:42:00,560
Speaker 1: Okay, Well, if a credit guys like us to watching

854
00:42:00,600 --> 00:42:02,960
Speaker 1: bad news all day and always thinking about the worst

855
00:42:03,000 --> 00:42:07,279
Speaker 1: case outcomes, what worries you about the setup at the moment?

856
00:42:07,280 --> 00:42:08,400
Speaker 1: I mean, it just seems like there is a lot

857
00:42:08,440 --> 00:42:10,319
Speaker 1: to worry about. But the last few days, I mean,

858
00:42:10,320 --> 00:42:12,480
Speaker 1: I'm going to date this for our listeners. May thirteenth

859
00:42:12,600 --> 00:42:14,680
Speaker 1: is where we're speaking and we don't know what's going

860
00:42:14,719 --> 00:42:17,759
Speaker 1: happened tomorrow, but what worries you about, you know, the

861
00:42:17,760 --> 00:42:18,839
Speaker 1: outlook for the rest of the year.

862
00:42:19,600 --> 00:42:22,160
Speaker 3: Well for yield centric, I mean that is the underpinning

863
00:42:22,200 --> 00:42:25,080
Speaker 3: of the bid for credit and makes sort of IG

864
00:42:25,239 --> 00:42:27,680
Speaker 3: credit for a while the only game in town. I

865
00:42:27,719 --> 00:42:30,719
Speaker 3: think that's evolving. Ah, we saw some money leave equities

866
00:42:30,800 --> 00:42:35,480
Speaker 3: and come into investment grade credit during peak uncertainty. If

867
00:42:35,560 --> 00:42:39,040
Speaker 3: underlying yields come down in a material way, some of

868
00:42:39,080 --> 00:42:42,640
Speaker 3: that bid is going to erode. And so you know,

869
00:42:42,680 --> 00:42:44,640
Speaker 3: you think about five point thirty on the index, it's

870
00:42:44,760 --> 00:42:47,680
Speaker 3: ninety fourth percentile going back to the global financial crisis.

871
00:42:48,120 --> 00:42:50,040
Speaker 3: I mean that is a huge reason why the draw

872
00:42:50,080 --> 00:42:52,719
Speaker 3: and dry powder is as robust as it is, and

873
00:42:52,800 --> 00:42:56,520
Speaker 3: so I really am keeping an eye on volatility in

874
00:42:56,680 --> 00:42:59,560
Speaker 3: treasury markets. Is sort of fundamental to the health that

875
00:42:59,560 --> 00:43:02,960
Speaker 3: they must grade new issue market and secondary market as well.

876
00:43:03,040 --> 00:43:05,040
Speaker 1: But we've talked about yields having to go down to

877
00:43:05,080 --> 00:43:09,319
Speaker 1: what near four percent on IG for people to back off.

878
00:43:09,360 --> 00:43:10,680
Speaker 1: That seems like a long way away.

879
00:43:11,120 --> 00:43:14,319
Speaker 3: It feels like a long way away, and you know,

880
00:43:15,680 --> 00:43:18,919
Speaker 3: the question, the question also becomes it do yields become

881
00:43:19,040 --> 00:43:20,920
Speaker 3: so high that they're punitive. If we've got all in

882
00:43:21,000 --> 00:43:24,480
Speaker 3: yield focused borrowers and we've just seen a material move

883
00:43:24,560 --> 00:43:27,120
Speaker 3: higher and all in yields, we have seen some issuers

884
00:43:27,120 --> 00:43:28,640
Speaker 3: say I'm going to wait this out and hope that

885
00:43:28,719 --> 00:43:31,160
Speaker 3: yields come back down before I move forward. So it

886
00:43:31,200 --> 00:43:34,920
Speaker 3: is the spread focused borrowers electing to hop in here

887
00:43:35,080 --> 00:43:38,319
Speaker 3: all in yields. If you've got spreads, spread moves mitigating

888
00:43:38,440 --> 00:43:40,920
Speaker 3: the move higher and treasuries, which is where we stand today,

889
00:43:41,200 --> 00:43:44,480
Speaker 3: there are opportunities, I think to be had. But this

890
00:43:44,520 --> 00:43:47,080
Speaker 3: is very sort of day by day evaluating what the

891
00:43:47,160 --> 00:43:49,640
Speaker 3: right trade is for the right client and based on

892
00:43:50,040 --> 00:43:52,600
Speaker 3: you know, what lens are they looking at the world through.

893
00:43:52,760 --> 00:43:55,680
Speaker 3: Is it yield? Is it spread? Is it They've got

894
00:43:55,680 --> 00:43:57,680
Speaker 3: so much cash that they're going to just sit be

895
00:43:57,840 --> 00:44:01,400
Speaker 3: patient here till the world becomes a bit more settled.

896
00:44:01,800 --> 00:44:03,680
Speaker 3: It's it's very case specific.

897
00:44:03,920 --> 00:44:05,560
Speaker 1: I guess to flip the question, though, you were in

898
00:44:05,600 --> 00:44:07,960
Speaker 1: the middle of all these investors and issuers and you

899
00:44:08,000 --> 00:44:10,879
Speaker 1: see a lot of stuff, what's the question they ask

900
00:44:10,920 --> 00:44:12,720
Speaker 1: you most what are they most worried about?

901
00:44:13,400 --> 00:44:16,239
Speaker 3: They're most worried about, how and when are they going

902
00:44:16,280 --> 00:44:19,080
Speaker 3: to see more? Thirty year issuance, and so if everyone's

903
00:44:19,080 --> 00:44:22,120
Speaker 3: searching duration, it's the reason even a lot of international

904
00:44:22,160 --> 00:44:25,840
Speaker 3: investors gravitate to our market the absence of long dated supply.

905
00:44:25,840 --> 00:44:29,160
Speaker 3: We're down nine percent year over year. We had that

906
00:44:29,239 --> 00:44:31,359
Speaker 3: string you know of over a month of no thirty

907
00:44:31,440 --> 00:44:36,240
Speaker 3: year bullet issuance. It's problematic. It is allowing for curves

908
00:44:36,239 --> 00:44:39,120
Speaker 3: to compress. So it's great for issuers. Cat printed the

909
00:44:39,160 --> 00:44:42,160
Speaker 3: flattest ten thirties curve since twenty twenty yesterday, so we're

910
00:44:42,160 --> 00:44:45,880
Speaker 3: proud of that outcome. They're flat in the secondary market today.

911
00:44:47,040 --> 00:44:49,799
Speaker 3: You know, I worry can we source enough assets to

912
00:44:49,920 --> 00:44:53,160
Speaker 3: appeal to where the bid is gravitating and that's out

913
00:44:53,160 --> 00:44:53,760
Speaker 3: the curve.

914
00:44:53,800 --> 00:44:55,920
Speaker 1: So the investor aren't running for the exits. They're actually

915
00:44:55,960 --> 00:44:56,759
Speaker 1: rushing to buy more.

916
00:44:56,920 --> 00:44:58,799
Speaker 3: They're rushing to buy more, and they're rushing to buy

917
00:44:58,840 --> 00:45:01,240
Speaker 3: more in the long end, having a hard time producing

918
00:45:01,239 --> 00:45:01,960
Speaker 3: it at the moment.

919
00:45:02,360 --> 00:45:04,879
Speaker 1: Great stuff. Megan Graper, Global head of Debt Capital Markets

920
00:45:04,920 --> 00:45:06,360
Speaker 1: at Barclays. It's been a pleasure having you on the

921
00:45:06,360 --> 00:45:07,279
Speaker 1: credit Edge money. Thanks.

922
00:45:07,400 --> 00:45:08,680
Speaker 3: Thanks you all so much, And to.

923
00:45:08,680 --> 00:45:10,800
Speaker 1: Annol Kakuda with Bloomberg Intelligence, thank you very much for

924
00:45:10,880 --> 00:45:11,520
Speaker 1: joining us today.

925
00:45:11,560 --> 00:45:12,439
Speaker 2: Thanks for having me again.

926
00:45:12,600 --> 00:45:14,719
Speaker 1: For even more analysis, read all of Ronold's great work

927
00:45:14,719 --> 00:45:17,200
Speaker 1: on the Bloomberg Terminal. Bloomberg Intelligence is part of our

928
00:45:17,239 --> 00:45:20,320
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929
00:45:20,320 --> 00:45:23,720
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930
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Speaker 1: and outlooks on more than ninety industries and one hundred

931
00:45:26,520 --> 00:45:30,440
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932
00:45:30,480 --> 00:45:33,000
Speaker 1: Credit Edge wherever you get your podcasts. We're on Apple,

933
00:45:33,080 --> 00:45:36,319
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934
00:45:36,400 --> 00:45:40,239
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935
00:45:40,320 --> 00:45:43,800
Speaker 1: or email me directly at Jcrombie eight at Bloomberg dot net.

936
00:45:44,360 --> 00:45:46,520
Speaker 1: I'm James Crombie. It's been a pleasure having you join

937
00:45:46,600 --> 00:46:08,040
Speaker 1: us again next week on the Credit Edge