Corporate credit outlook

Q2 2022: A balancing act

Markets face a growing list of uncertainties, but we believe that credit’s strong fundamentals should help the asset class find solid footing.

Download the outlook
April 11, 2022 | 13 minute read

The start of 2022 has quickly undone the relative calm across markets that was a hallmark of 2021. In credit markets alone, the number of volatile days, defined as a change in spread of 10 basis points or more, has already surpassed the total number of such days for all of last year. The downside in some markets has been severe, with peak declines for the S&P 500 and NASDAQ at -12.2% and -19.5%, respectively. Credit has also followed equity markets lower, with peak to trough declines in high yield bonds and senior secured loans of -6.3% and 2%, respectively. Higher-rated fixed income has been particularly hard hit, reflecting the rising interest rate environment. As of March 30, the Bloomberg Agg is down nearly -6% year to date, surpassing its lowest annual return on record. It has certainly been a difficult quarter for traditional debt and equity investors.

This information is educational in nature and does not constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment. FS Investments is not adopting, making a recommendation for or endorsing any investment strategy or particular security. All views, opinions and positions expressed herein are that of the author and do not necessarily reflect the views, opinions or positions of FS Investments. All opinions are subject to change without notice, and you should always obtain current information and perform due diligence before participating in any investment. FS Investments does not provide legal or tax advice and the information herein should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact any investment result. FS Investments cannot guarantee that the information herein is accurate, complete, or timely. FS Investments makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.

Any projections, forecasts and estimates contained herein are based upon certain assumptions that the author considers reasonable. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. The inclusion of projections herein should not be regarded as a representation or guarantee regarding the reliability, accuracy or completeness of the information contained herein, and neither FS Investments nor the author are under any obligation to update or keep current such information.

All investing is subject to risk, including the possible loss of the money you invest.

Kara O’Halloran, CFA

Director, Investment Research

Robert Hoffman, CFA

Managing Director, Investment Research

Search our site