Higher-for-longer is no longer a forecast — it is the operating environment. We assess what that means for credit positioning across consumer, corporate and real estate debt.
Central banks have signalled patience. Disinflation has been faster than expected in some economies and slower in others, but the consensus among major central banks is to keep policy in restrictive territory until services inflation is unambiguously contained. For credit investors, that means base rates that look closer to 4-5% than 1-2% for the foreseeable future.
Senior secured corporate debt to non-bank lenders and mid-market operating businesses continues to offer attractive risk-adjusted yield. We favour facilities where origination quality is high, covenants are real, and security packages include first-ranking mortgages or general security agreements.
We are cautious on unsecured consumer credit and on real estate facilities where underwriting was done in a low-rate world. Workout dynamics in those segments are increasingly slow and unpredictable.
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