Traders Snatch Up Derivatives as Risks Grow: Credit Weekly
View original at finance.yahoo.comTraders Snatch Up Derivatives as Risks Grow: Credit Weekly DTCC, Barclays (Bloomberg) -- War in Iran. A weakening US jobs market. Artificial intelligence and the potential demise of whole industries…
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Fund withdrawal limits are generally features and not bugs
80% confidenceBullish bets in credit default swap indexes have been eroding over the past few weeks amid anxiety over the software sector
80% confidencePrivate credit default rates could reach 15%
80% confidenceThe concerns in the market are a ton of noise
80% confidenceWe don't want to be in a position where we have to be reactive during a market downturn. The company is instead in a position to snatch up bargains if they arise.
80% confidenceWith record fundraising following the 2008 financial crisis, direct-lending vehicles have loosened their underwriting standards and are due for a default cycle
80% confidenceBusiness development companies are sitting on a massive pile of leveraged loans which could be sold to meet redemption requests and push spreads wider
80% confidenceWar on its own doesn't tend to directly impact corporate bond spreads or returns, and valuations tend to be driven more by what the Fed is doing amid the conflict
80% confidenceUBS forecast that private credit default rates could reach 15% was absolutely wrong
80% confidenceDoesn't see cause for concern in private credit, but the firm is watching closely to see if there's been too much frothiness
80% confidenceThere needs to be a material catch-up between the risks the market is worried about in private capital and geopolitics and the risks being reflected in high grade corporate bond spreads. This is a very good time to be looking at credit hedges.
80% confidenceX and xAI will repay the outstanding debt in full
80% confidenceIf the US central bank eventually has to start boosting rates, credit could get hit
80% confidenceInvestors can still reposition for risks that appear skewed to the downside. Recent geopolitical events, along with AI, software and private credit, are increasingly interconnected. That's likely to create clearer winners and losers.
80% confidence