Asia Insights: Seeking Stable Returns
With the global economy showing signs of cooling and Chinese economic momentum remaining weak, the outlook for Asian markets is increasingly mixed.
Authored by: Vijay Padmanabhan
2024 Outlook: Credit
We expect direct lending and European opportunistic private credit funds will outperform their long-term averages because of high asset yields and the pull back in credit availability among traditional lenders. We like structured credits, particularly high-quality collateralized loan obligation debt, and we expect high-yield bonds will outperform leveraged loans. But we remain neutral on high yield because spreads are compressed.
Credit Score: Why Bank Retrenchment Spells Opportunity for Pensions
Banking sector challenges have helped to establish private lenders as main sources of capital to mid-market and large companies and created a range of private credit investment opportunities for pension plan sponsors, which requires thoughtful portfolio construction when implementing these strategies in an uncertain market environment.
2023 Outlook: Credits
We expect most liquid credits will generate higher returns in 2023 relative to 2022, given the better yields on offer. We also see private credit as offering opportunities, particularly in secondary trading.