Recalibrating the rulebook

In previous editions of 360°, we had warned about the level of complacency in markets. Buoyed by central-bank support, the market seemed to be pricing in a near-perfect world with almost no tail risk. Since then, the coronavirus pandemic has had a colossal impact on markets that is correlated across geographies, sectors and asset classes – credit included.  

Yet even in the eye of the storm, we remain optimistic about the opportunity to seek out idiosyncratic stories in credit markets over the next 12 months. Remaining mindful that the lows are likely not behind us, an active, high-conviction approach should help us recalibrate our models and ascertain which credits have the capacity to weather any further volatility.  

In this issue of 360°, we carry out our usual survey of fixed-income asset classes and also take a closer look at fundamentals within the energy sector and financials, changes to lending in response to the current crisis and recent developments in the world of environmental, social and governance (ESG) investing.

See below for a flavour of these sections or read the full report for a more comprehensive picture.