The European Credit Strategist: Let’s get real

Research evidence excerpt

The European Credit Strategist: Let’s get real

MI Credit Investor Survey: All things

indices suggest that European corporates’ earnings margins are falling a lot quicker in private

this cycle than was seen in the 2022/2023 inflation era. Moreover, margin compression

If you like it bubbly…seems to be occurring at a faster rate for European corporates, than for their US

counterparts. We continue to advocate owning “pricing power champion” sectors in Peace out, risk on

Europe, such as capital goods. The sector has displayed historically low EBITDA margin

volatility. CreditBook: Is it all over?

Hyping up the long-end Deal or no deal?

Given the splurge in issuance this year, investor concerns regarding the concentration of Who let the hawks out?

hyperscaler debt across the global credit market is growing. However, our US Credit

Audio discussion: Can we keep itStrategists downplay this, given hyperscaler index weights are comparable to other large

private?sectors. Moreover, sectors such as telcos in the early 2000s exhibited far greater index

concentration than the hyperscalers of today. But looks can also be deceiving. Given Strait talking

their penchant for longer-dated supply, hyperscalers are already nearly 11% of the Euro

15+yr non-financial market (the Euro long-end tends to be the home of Reverse Can credit and oil mix?

Yankees). Our US team argue that the drop-off in hyperscaler supply in 2H could finally

CreditBook: Damage reporthelp their spreads rally. If so, we would expect this to drive an outperformance of long-

end Euro credit in 2H. Curve flattening likely lies ahead, therefore. AI: Time to get “real”

Credit Investor Survey – Byte-sized

performance