Technicals support short-term performance, but many municipalities are ill-prepared for an economic downturn.
Favorable credit trends and market technicals allowed the sector to shrug off slowing housing activity and higher interest rates.
The yield curve should flatten further as economic strength continues to justify Fed tightening.
Factors that have contributed to strong earnings growth this year will fade in 2019 and turn into headwinds in 2020, exposing leveraged corporate borrowers.
Steady performance despite market volatility in the first half of 2018 validates the sector’s defensive profile.
Supply weighs on CLO markets, but opportunities abound in commercial ABS.
Rising net supply of institutional loans has weighed on performance, but rising carry attributed to higher Libor continues to attract inflows.
Full-term interest-only loans and higher debt service coverage ratios support AAA-rated interest-only bonds.
Borrowers continue to benefit from low interest rates and an abundance of capital, but values may be coming down.
Technical dynamics weigh on high-yield rallies despite improving fundamentals.
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