What a difference a few months makes.
Spreads proved resilient and markets functioned — yet investors aren't being paid to take risk in lower-quality or long-duration credit. Brian Carney on the quarter, plus four features from the desk.
What a difference a few months makes
Worries tied to the inflationary impact of the Middle East conflict moved market predictions from rate cuts at the start of the year toward likely hikes, lifting global government yields and flattening curves. The question of "what next" now rests with politicians and central bankers, including the newly confirmed Fed Chair, Kevin Warsh.
Other risks remain largely discounted, or in the case of private credit, contained for now. Against this backdrop, credit spreads proved resilient — global investment grade and high yield at 48 and 243bps, slightly tighter than the start of the year and, in our view, still expensive.
Markets remain tilted in favour of borrowers over lenders, with less and less differentiation between issuers of very different credit quality. We see select opportunities in high yield, but overall the environment warrants a conservative posture: investors simply aren't compensated for assuming risk in lower-quality or long-duration credit.
In this issue
4 features · sequenced to read top to bottomNew Issue Concessions (Or Lack Thereof)
New issue concessions compensate investors for the risk of an untested deal. In Canada they've turned negative — another sign of a market priced to perfection and tilted toward borrowers.
3 min
Hey Google, how much can I borrow before I break the bond market?
Hyperscalers are testing the capacity of global bond markets. Alphabet's $60 billion multi-currency spree is a textbook case in how much supply the market can quietly absorb.
5 min
Mega-Deals, AI Capex, and the Limits of Bank Balance Sheets
Record AI issuance is colliding with the return of fully underwritten mega-acquisition financing. The real 2026 risk for credit investors may not be recession — it's market congestion.
4 min
Slow Puncture: The Air Coming Out of Private Credit
Two years of caution, and the air is now slowly escaping the tire: valuations drifting lower, redemptions rising, and price discovery returning to a market that long deferred it.
4 min
