The Credit Edge by Bloomberg Intelligence First Eagle Plays Safe as Credit Spreads Get Squeezed
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Jan 9, 2025 Jim Fellows, Co-president and CIO of First Eagle Alternative Credit, shares his insights on the current credit landscape. He highlights the tightening debt spreads and urges a conservative approach in leveraged loans and high-yield bonds. The conversation digs into opportunities in asset-based lending and trends in middle-market loan pricing. Fellows also discusses the outlook for buyout finance and the challenges posed by private credit defaults, revealing the complexities and risks in today's investment climate.
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Investment Grade Spreads
- Investment Grade credit spreads are historically low, potentially heading even lower.
- Technical factors like moderate GDP growth, contained inflation, and strong employment drive this trend.
Stay Conservative
- Remain conservative in the current market environment given tight spreads and limited screaming value.
- Explore lower middle market private credit for better value opportunities.
Lower End Private Credit
- The lower end of private credit refers to smaller companies, not lower credit quality.
- Middle market companies with $20-50 million EBITDA offer less spread compression.