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.
Strong market fundamentals are leading to an increase in lower-rated investment-grade debt that may struggle as rates rise.
A spate of recent Supreme Court decisions should help boost state and local government revenues.
The long-running rally has emboldened dealers while investors have tempered their risk appetite.
Spread widening in the Agency market could present an attractive opportunity to allocate assets.
Investors should stay guarded for exogenous shocks that could pull the next recession forward and cause markets to reprice credit risk.
We expect stable performance amid increased supply and a benign prepayment environment.
We continue to find opportunities in CLOs and ABS, but look for ways to limit risk as the credit cycle nears its end.
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