Q4 2022 Corporate credit outlook: At a crossroads

Our research team recaps what has happened in credit this year, and how market volatility could impact key sectors in the coming months.

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October 10, 2022 | 20 minute read

About this episode

We’re spooked it’s already October, which means Q4 outlook season has begun! Investment Research Director Kara O’Halloran kicks off this quarter’s outlook episodes alongside Head of Investment Research Rob Hoffman to discuss the rollercoaster ride credit has taken so far this year. As we reach the end of 2022, it appears credit is facing a crossroads—while fundamentals remain strong, the team assesses what sectors could thrive while others may feel the hit of a tough year.

Want more from our credit experts? Access the full outlook at https://fsinvestments.com/fs-insights/q4-2022-credit-outlook/

Transcript excerpt:

[00:00:20] Kara O’Halloran:
Welcome back to Fireside, a podcast from FS Investments. My name is Kara O’Halloran. I’m a director on the investment research team here. And on today’s episode, we are somehow kicking off our outlook content for the last quarter of 2022 with an episode focused on credit markets. So, we will talk about what’s been driving markets through the end of September, whether we think credit markets are fairly valued, and how we think credit is going to cap off what has really been a difficult year.

[00:00:47] Kara O’Halloran:
So as always, to walk through all of that with me, I have brought on Rob Hoffman. The head of our research team. Rob, Thanks for joining.

[00:00:55] Rob Hoffman:
Hey, good morning. Happy to be here.

[00:00:56] Kara O’Halloran:
Yeah, it’s been a minute since we recorded, so, we’ve been feeling a little rusty, but let’s dive in.

[00:01:01] Rob Hoffman:
There’s nothing happening in markets.

[00:01:02] Kara O’Halloran:
Oh, I know exactly. Well…

[00:01:03] Rob Hoffman:
It’s a quiet year.

[00:01:05] Kara O’Halloran:
So actually, last time we left off in early July top, our last Outlook episode. Credit was trying to make a rally, which it did for a lot of July and half of August, but exactly to your point where, clearly nothing’s going on in markets this year, but if you had closed your eyes and just woken up today, you’d never know that any of that happened.

[00:01:25] Kara O’Halloran:
Right? So, the high yield market as of yesterday has fully walked back. All of those gains that we saw from the summer. Year to date is now down almost 15%.

[00:01:34] Rob Hoffman:

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Kara O’Halloran, CFA

Director, Investment Research

Robert Hoffman, CFA

Managing Director, Credit Wealth Solutions

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