About this episode
In this episode, Investment Research Director Kara O’Halloran sits down with Head of Investment Research Rob Hoffman to review their corporate credit outlook for Q2. They discuss credit fundamentals, the spread environment and where interest rates could go from here. Plus, they cover areas where opportunity may lie for active investors. Looking for more? Download the full outlook here: https://fsinvestments.com/fs-insights/q2-2022-corporate-credit-outlook/
Transcript excerpt:
Kara O’Halloran (00:00):
Welcome back to Fireside, a podcast from FS Investments. My name is Kara O’Halloran, and today we are kicking off our Q2 outlook content with an episode all about credit markets. Like really most major asset classes, credit has had a bit of a rough start to the year, but the headline numbers don’t tell the full story. With me to parse through everything we’ve seen in credit markets this year, and talk about what we can expect going forward, is Rob Hoffman, the head of our research team.
Rob Hoffman (00:30):
Hello, thanks for having me.
Kara O’Halloran (00:31):
Yeah. Thanks for coming on; our credit guy.
Rob Hoffman (00:36):
Yeah.
Kara O’Halloran (00:36):
Rob, let’s talk a little bit about what we’ve seen so far this year. Thinking back to 2021, credit was very calm, pretty steady. I think I might have used the word boring at times and in Q1, not so much. High yields, as of now, are down 4.5% this year; the worst start to a year in history. The most acute pain was felt in double B bonds, those highest rated. They’re down 5.4%, triple Cs are down less, down less than 4%. Loans, on the other hand, are only down 10 basis points. There are a lot of things going on in the markets. Walk us through what happened in credit in the first quarter.
