The demand for corporate credit shows no sign of abating, with the record year of loan issuance in 2017 potentially leading to an all-time peak in 2018 in volume terms for high-yield markets. Leveraged credit meets a keenly felt need among investors in the present climate for yield, making it a borrower's market.
Is there still room for investors to make good risk-adjusted returns in private credit? If so, ought they, broadly speaking, to buy the same sorts of credits as everyone else? Put simply, we believe the answers are, respectively, yes and no. Now is the time to exercise caution when considering investing in mainstream corporate credits. We believe it is also the right time for investors to look at innovative ways to build exposure to exciting and potentially rewarding classes of opportunities.