Credit Calls

Research evidence excerpt

Credit Calls

xpansion agreements, and its key programs

supported by the Department of War’s 2027 budget request. We expect LMT to benefit from

increased defense spending over the next several years. Additionally, we think demand for

LMT’s products in international markets will be accretive to growth. We are reiterating our

Overweight recommendation on the Lockheed Martin credit. Our target spread for

LMT 30-year risk is T+65bp.

RTX Corporation: Remain Overweight Following 2Q26 Results; Buy RTX 6.4% Notes

due 2054, Our Analyst Focus List Pick (Yilma Abebe)

Credit view: RTX Corp’s (RTX) second quarter performance was ahead of expectations. The

company’s portfolio of defense products and services are well positioned to capture

opportunities in the current geopolitical environment, supported by growing international

demand. We expect RTX’s commercial aerospace business to benefit from production rate

increases at Boeing and Airbus. We think RTX’s balanced portfolio of commercial and

defense assets, its scale, strong market positions, and highly cash-generative businesses

make it a solid credit story. We reiterate our Overweight recommendation on the RTX

credit. We see fair value at T+70bp for RTX 30-year risk.

Strategy & Sector Commentary

US Credit Market Liquidity: 1H26 Update: Hyperscalers Reshaping The Market

Liquidity Picture (Tarek Hamid / Pavan D Talreja, CFA / Silvi Mantri)

Liquidity increased dramatically, but that increase was concentrated in higher-rated

products. Aggregate trading activity was up +28% y/y in HG versus just +5% in HY and -3%

in Loans/CLOs. The same skew showed up in ETFs (+34% HG vs +4% HY) and CDX

(CDX.IG +41% vs CDX.HY +10%).

Company Comments

Albertsons: When Markets are not so Super. . . Clean up in Aisle 3! (Carla Casella, CFA)