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What Is the Credit Cycle Telling Us About 2016? 

November 30, 2015

Tony Wong, Invesco

What is the credit cycle?

First, let’s briefly define what the credit cycle is. The credit cycle illustrates how easy, or how difficult, it is for borrowers to access credit. It’s driven by how companies are behaving toward their creditors, and how fundamental credit metrics are evolving.

The credit cycle moves in phases as monetary policy, interest rates and economic growth change over time. It’s important to note that the credit cycle is different than the economic cycle, but they’re related as the level and pace of credit creation is a key factor in economic growth.

Where are we in the credit cycle?

For most fixed income asset classes, the cycle has continued to advance toward the late cycle phase. Here are some notable highlights of markets in transition:

US investment grade. We see growing signs that US investment grade companies are in the late stages of the credit cycle.  Read more

 
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