Credit Market Outlook

Apollo Chief Economist

High rates and a slowing economy are creating opportunities for credit investors. Our latest credit market outlook is available here, key charts inserted below.

Credit market outlook: High rates and slowing economy creating opportunities for credit investors
Table of contents
Bankruptcy filings rising for companies with at least $10mn in liabilities
Source: S&P Capital IQ, Bloomberg, Apollo Chief Economist. Note: Bankruptcy figures include public companies or private companies with public debt with a minimum of $2 million in assets or liabilities at the time of filing, in addition to private companies with at least $10 million in assets or liabilities.
High yield leverage has come down after the pandemic
Source: Bloomberg, Apollo Chief Economist. Note: Median leverage for the bonds in H0A0 index.
IG leverage has come down after the pandemic
Source: ICE BofA, Bloomberg, Apollo Chief Economist. Note: Index used C0A0 Index.
IG ICR
Source: Bloomberg, Apollo Chief Economist
HY ICR
Source: Bloomberg, Apollo Chief Economist
Quality composition of the IG Index
Source: ICE BofA, Bloomberg, Apollo Chief Economist. Note: Breakdown by market value. Data as of June 30, 2023.
Quality composition of the HY Index
Source: ICE BofA, Bloomberg, Apollo Chief Economist. Note: Breakdown by market value. Data as of June 30, 2023.
Quality composition of the leveraged loans index
Source: Pitchbook LCD, Apollo Chief Economist
IG market is eight times bigger than HY and eight times bigger than the loan market
Source: ICE BofA, Bloomberg, Pitchbook LCD, Apollo Chief Economist. Note: Ticker used for HY is H0A0 Index and for IG it is C0A0 Index and for Loans it is SPBDALB Index.
US IG spread highly correlated with implied rates vol
Source: Bloomberg, Apollo Chief Economist
Regional bank spreads still very wide
Source: ICE BofA, Bloomberg, Apollo Chief Economist. Note: Unweighted average spreads of bonds from ICE 5-10 Year US Banking Index, C6PX Index for bonds issued before Jan 1, 2023. There are 8 banks in the Regional index and 41 banks in the Diversified index. Regional banks include BankUnited Inc, Citizens Financial Group, Huntington Bancshares Incorporated, Regions Financial Corporation, Truist Financial Corporation, Webster Financial Corp, Wintrust Financial Corp, and Zions. Diversified banks include JP Morgan, Citibank, Bank of America, etc.
Retail investor activity in IG and HY
Source: Bloomberg, Apollo Chief Economist. Note: Tickers used HYG US Equity and  LQD US Equity.
Fewer high yield bonds being traded
Source: FINRA Trace, Bloomberg, Apollo Chief Economist
Credit spreads normally widen when the Fed is hiking
Source: Bloomberg, Apollo Chief Economist
M&A activity declining
Source: Bloomberg, Apollo Chief Economist

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