Loans present an opportunity to move up the capital structure with better spreads and yields than high-yield corporate bonds.
Prepayment risk for recently originated mortgages remains high as mortgage rates continue to fall.
We prefer short, senior CLO tranches and new-issue commercial and aircraft ABS.
Worrisome pace of downgrades in the leveraged loan market is likely to continue.
Liquidity remains strong after the largest post-crisis SASB and CRE-CLO deals.
WeWork’s failed IPO does not signal the demise of flexible office space.
Investors should continue to limit exposure to CCCs despite recent cheapening because of the asymmetry of potential spread outcomes.
Demand for investment-grade corporate bonds should remain strong.
Continued strong demand enables move up in credit quality.
New issuance and trading activity in the RMBS market reflect a change in investor focus.
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