With CLO debt at post-crisis tights, we prefer less credit risk and spread duration.
The likelihood that rates will rise means that prepayment risk has decreased dramatically.
Tighter loan spreads cause some concern, but the gradual increase in Libor keeps loans looking attractive.
Remain vigilant on property valuations.
The flow of funds from foreign sources into U.S. real estate will be important in 2017.
We are constructive on high yield but keeping an eye out for signs of an over-extended rally.
Yields look attractive compared to six months ago, but spreads have discounted the potential for pro-growth fiscal policies.
Policy changes, including tax reform and deregulation, create opportunity and uncertainty.
Tight spreads necessitate caution, but improving credit fundamentals beget opportunities.
The recent rise in Treasury yields reflect a very optimistic “if” scenario based on the incoming administration’s anticipated policies.
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