What does 2025 hold for global credit markets? Our quarterly look at trends and indicators—the Credit Monitor—is now live. Peter Graf, Jennifer Kozicki, Boris Okuliar and Ruben Valverde, CFA help unpack the potential impact of multiple factors, from policy decisions to geopolitical turmoil to rate environments, in the latest edition below. More here: https://lnkd.in/eKjBujN8
Credit markets seem poised for increased activity supported by global economic growth, cooling core inflation, optimism for soft landings, anticipated deregulation in the U.S. and lower cost of debt. The recent U.S. election continued a global trend of voters looking for a change from incumbents and the status quo. In fact, a recent Harvard University study shows that, since COVID first hit in 2020, 74% of western democracies have ousted their incumbent leader. Broader geopolitical issues remain, and the outlook for U.S. policy - in particular potential tariffs and the global response to them - will be a key factor in global growth and inflation. Slightly-less-high-for-longer rate environments still seem likely as markets grapple with balancing these global factors – the number of incremental interest rate cuts through year-end 2025 priced in the U.S. is now down to 3.5 from eight. The current interest rate environment feels reminiscent of the mid-1990s, when Greenspan’s U.S. Federal Reserve hiked base rates seven times over 12 months and then ultimately cut base rates three times over the following year as inflation eased and signs of economic weakness started to emerge. The interest rate cuts were aimed at a soft landing - achieving acceptable economic growth while ensuring inflation and unemployment aren’t too high. In the mid-1990s those initial base rate increases also caused credit spreads to tighten (like today) and remain tight for the next 30 months, as equity and credit markets were supported by a broader risk-on theme given the successful soft-landing... ** Boris Okuliar, Jennifer Kozicki, Ruben Valverde, CFA and I are pleased to share the latest quarterly Ares Global Credit Monitor. Full update with charts here: https://lnkd.in/gZXgFZV7 ** There is no M&A wave just yet, but these transactions continue to pick up as companies feel more confident in the outlook. Once again, we took a look at the volume of signed Non-Disclosure Agreements (NDA) - a key legal document at the start of an M&A process. Ontra, the global AI legal tech firm for private markets, shared their latest data which shows that - on a rolling 12-month basis - there has been a 10% increase in activity from just over a year ago. This is broadly consistent with the latest findings from the EY Global CEO Confidence Index, which interviewed 1,400 CEOs globally and showed an increase in confidence around outlook. In fact, according to the survey over 40% of CEOs are now looking to complete an acquisition, divestment or IPO in the next 12 months... Ares Management Corporation #investing #markets #leveragedfinance #privatecredit #directlending