Capital IdeasTM
Investment insights from Capital Group
Fixed Income
Damien McCann
Credit markets have remained robust, even as interest rates have soared to multi-decade highs.
In this interview, Capital Group portfolio manager Damien McCann explains why he expects this resilience to continue and discusses the opportunities he sees in multi-sector credit portfolios designed to generate income from a combination of corporate bonds, emerging markets debt and securitised credit.
Overall, McCann says this is a constructive backdrop for credit, with improved economic growth expected and inflation still coming down gradually. This is not to say credit fundamentals are fine everywhere, but problems are more idiosyncratic and tend to be ascribable to individual industries or issuers.
Technicals are also supportive: now rates are higher, borrowers are choosing to borrow less or for shorter periods of time. Higher rates are also creating more interest in credit from lenders and bond investors.
Investment-grade credit market has evolved and expanded
Amount Outstanding
Source: Bloomberg. Chart shows sector allocations within the Bloomberg US Corporate Investment Grade Index. Data as of 29 May 2024.
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Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. All information is as at the date indicated unless otherwise stated. Some information may have been obtained from third parties, and as such the reliability of that information is not guaranteed.
Capital Group manages equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.