JPM Daily Credit Strategy Update: An update on hyperscaler performance and a look at Datacenter ABS credit metrics; HG inflows fall to a 3m low

Research evidence excerpt

JPM Daily Credit Strategy Update: An update on hyperscaler performance and a look at Datacenter ABS credit metrics; HG inflows fall to a 3m low

ebt service coverage ratios and leverage ratios across for the programs. From a corporate

investor standpoint, ABS trust performance can be important because in the event that any ABS triggers trip, the issuer loses any

excess cashflow as it gets trapped in the ABS trust, and potentially also loses access to the ABS funding market in the future, at

least at reasonable spreads. Moreover, the performance data can be useful for corporate investors to monitor overall cash flows

generated from an ABS issuers data center master trust on a monthly basis, and use it as a proxy to identify idiosyncratic sponsor

risks or systematic sector trends. For more information such as the trigger calculations etc, kindly refer to the team's weekly from

earlier today.

Fund Flows: HG fund flows moderated to +$5.2bn of inflows (-21% WoW), well below the 4-week average of +$8.7bn and the

lowest since the end of April. The slowdown was led by both ETFs and Mutual Funds, where ETF inflows declined 23% WoW to

+$3.6bn, and Mutual Fund inflows also fell 14% WoW to +$1.6bn. This is logical in light of MTD total return -1.6% so far, on

track for the 2nd worst month YTD (March -2.1%). Recall there was a single week of outflows in early April (-$1bn) after which

flows bounced back post initial cease-fire. Overall, our estimate of flows into HG corporate bonds across the fund complex

moderated to +$2.1bn (-18% WoW). Across HG sub-categories, the slowdown was concentrated in Aggregate funds where

inflows fell 30% WoW to +$3.4bn, primarily led by a drop in inflows into the intermediate bucket to +$2.2bn (-41% WoW).