The Credit Edge by Bloomberg Intelligence

SpaceX bondholders are bolstered by a fat equity cushion, high-grade ratings and a relatively small amount of debt outstanding — but they depend on founder Elon Musk, according to Bloomberg Intelligence. “There’s a huge risk there, and the rating agencies have actually pointed this out in terms of governance,” Robert Schiffman, BI senior technology credit analyst, tells Bloomberg News’ James Crombie in this special episode of the Credit Edge podcast. “You’re absolutely on an Elon Musk trip — his vision and his ability to raise money is a large portion of this company right now,” adds George Ferguson, BI senior equity analyst for aerospace, defense and airlines. The trio also discuss poor secondary performance in SpaceX bonds, relative value compared with the equity, and credit-market risks if AI flops.
See omnystudio.com/listener for privacy information.

Further acceleration in AI debt issuance has the potential to steer demand away from government bonds, according to Amundi, Europe’s largest asset manager. “At some point it could have a crowding effect, but we are not there yet,” Gregoire Pesques, the firm’s chief investment officer for global fixed income, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Tolu Alamutu in the latest Credit Edge podcast. “It’s a risk that we monitor,” says Pesques, whose company has $2.7 trillion under management. They also discuss value in corporate debt relative to government bonds, how G7 countries are behaving more like emerging markets and Amundi’s concerns about central bank independence.

See omnystudio.com/listener for privacy information.

Private credit disarray spells opportunity for housing giant Pretium, which targets high returns by lending to US homebuilders. “Our private credit looks a little bit different than other private credit in the sense that we are secured, we have real good downside protection,” Jon Pruzan, the company’s co-president, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Erica Adelberg in this episode of the Credit Edge podcast. “We have a lot of people who want capital and not a lot of people providing capital — that puts us in an opportunity to continue to generate attractive returns,” says Pruzan, who was previously chief financial officer at Morgan Stanley. They also discuss housing fundamentals, opportunity by region, how Pretium achieves midteens returns and political risks going into the November US midterm elections.
See omnystudio.com/listener for privacy information.

Private lenders are going back to basics as debt trouble spreads, market participants tell Bloomberg News’ James Crombie in this special episode of the Credit Edge podcast. “Boring is beautiful, boring is better right now,” says Christina Lee, managing director at Oaktree Capital Management. The podcast also explores AI debt risks, software distress, how tight bond spreads can go and the state of US consumers with the following guests: Matt Brill, head of North America investment-grade credit at Invesco; Anish Shah, global head of debt capital markets at Morgan Stanley; Lotfi Karoui, multi-asset credit strategist at Pimco; Jody Lurie, Bloomberg Intelligence senior credit analyst; Na Wei, global head of leveraged finance at Barclays; Sheel Patel, head of Mayer Brown’s private credit practice in New York; Shalini Sriram, Third Point’s head of structured credit; and Scott Goodwin, co-founder of Diameter Capital Partners. Interviews were recorded June 3 at Bloomberg’s Global Credit Forum in New York.

See omnystudio.com/listener for privacy information.

Robust demand from pensions and insurance companies will support corporate debt through macroeconomic headwinds and record supply, according to Goldman Sachs. “Spreads are tight to the prewar levels when the facts on the ground have unquestionably become more challenging,” Amanda Lynam, Goldman’s chief credit strategist, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Robert Schiffman in the latest Credit Edge podcast. “That is this uncomfortable tension that we have in the credit market,” Lynam says. “Sentiment around the yield-based buyer is really in the driver’s seat.” They also discuss the AI funding boom, private-credit risks, CCC underperformance and where to find value in structured products.
See omnystudio.com/listener for privacy information.