FICC Focus

Tom Howard, Lazard MD who advises on financing and capital-structure strategy, and Sam Whittaker, Lazard restructuring lead experienced in liability management, discuss rising capital solutions and the blurred line with restructurings. They cover stressed European sectors like chemicals and telecoms. They talk vintage effects, private credit limits, documentation flexibility and when liability management replaces full restructurings.

Benjamin Hunsaker, Portfolio Manager and Head of Structured Credit at Beach Point Capital, discusses mortgage and structured credit markets and long-short risk management. He covers agency MBS dynamics, non-QM mortgages, prepayment and coupon risks. He also walks through CMBS dislocations, consumer policy risks like proposed APR caps, and niche opportunities in distressed CRE and ABS.

Matt Hornbach, Morgan Stanley’s Global Head of Macro Strategy, specializes in macro, currencies, and fixed income. He compares the dollar to America’s stock and explores how shifting trade flows and deficits pressure the currency. He outlines the Fed’s path for cuts tied to quarterly inflation, discusses yield-curve steepener strategies, and highlights structural shifts in JGB demand and European bond opportunities.

Huw Worthington, Chief European interest rate strategist at Bloomberg Intelligence, shares insights on global rates and divestment fears. He argues that concerns about European investors pulling out of US assets are exaggerated. The discussion touches on Japan's fiscal signals impacting global markets and the potential of European 'anti-coercion' tools. Worthington also analyzes the timing of ECB and BoE easing and the market's response to Fed policy changes. Overall, it's a fascinating look at the interconnectedness of global finance.

Phil Brendel, a Senior Distressed Analyst at Bloomberg Intelligence, shares insights on distressed debt dynamics, highlighting the low levels of distressed opportunities amid tight high-yield spreads. Nagisa Balluku, a Senior Litigation Analyst, dives into recent bankruptcies, including STG Logistics and First Brands, discussing legal intricacies and disputes. They also tackle the implications of Hertz's Supreme Court petition denial and examine Saks Global's Chapter 11 challenges, all while considering what might disrupt the current credit rally.

In this discussion, Paul Mehta, Head of Leveraged Credit at Aberdeen Investments, shares his expertise on the evolving landscape of leveraged loans and private credit. He highlights how private credit is providing new financing alternatives, alongside the significant role of CLOs in the market. Paul discusses projections for loan returns in 2026, comparing them to high-yield bonds, and delves into the implications of private credit on public market defaults. Listeners can gain insights into market dynamics and investment opportunities ahead.

Maxwell Grinacoff, Head of US Equity Derivatives Research at UBS, shares invaluable insights into the current dynamics of equity derivatives. He explains how AI concentration has driven low SPX correlation despite high single-stock volatility. They delve into the rise of derivative-based ETFs and retail trading, revealing how these trends are reshaping market flows. Grinacoff also discusses strategic trades, including a compelling bet on Nasdaq volatility over S&P, and the significant implications of structured products in today's market.

Darrell Duffie, a Stanford professor and monetary policy expert, joins the conversation to dissect current Federal Reserve practices. He emphasizes the crucial link between reserves and the payment system, explaining why large reserves are now necessary. The talk dives into the Fed's shift to Treasury bills, the stigma surrounding its lending facilities, and how these factors can impact market liquidity. Duffie also previews his research on reserve levels affecting payment timings and potential solutions to reduce stigma in Federal funding.

Andrew Axelrod, Founder and CEO of Axar Capital Management, shares insights into the credit market's evolution and the ongoing challenges of distressed ownership. He discusses the concept of 'zombie owners' and how they misalign incentives, complicating recoveries. Axelrod also highlights the difference in reactions among banks, CLOs, and direct lenders, while emphasizing the benefits of private credit's non-mark-to-market approach. Open about labor market risks, he warns investors about potential inflation revival and urges focus on restructuring distressed firms in 2026.

Elias Haddad, Global Head of Market Strategy at Brown Brothers Harriman, joins the discussion to dissect currency trends for 2026. He highlights how the dollar may weaken under dovish Fed policies and rising fiscal stress. The duo explores the dollar-yen dynamic, with Elias making a compelling case for yen strength due to Japan's fiscal health. They also share a bullish outlook for the Australian dollar, driven by domestic activity. Don't miss their insights into euro prospects and the challenges facing the British pound!