"Real Yield" Roundup: Optimism Amid the Cracks in Credit

The transcript discusses the expected moderation of growth in 2019 and its implications for credit markets. It highlights the risks associated with investment grade credit, particularly the triple B component, and the potential impact of M&A activities. The discussion also covers the behavior of credit spreads and treasury yields, noting that corporate yields have remained stable. The role of leverage loans and their attractiveness in a potentially slowing Fed environment is examined. Overall, the outlook for credit remains positive unless a recession occurs, with no immediate signs of systemic risk.

What is the expected growth rate for 2019 according to the first section?

• High ones

• Low twos

• High threes

• Mid fours

What is a major concern for investment-grade companies discussed in the second section?

• High default rates

• Rising inflation

• Decreasing M&A activity

• Triple B component risks

What is causing the spread widening in credit spreads according to the third section?

• Increased corporate yields

• Rallying treasury market

• Decreased investment

• Higher cost of capital

What is the anticipated effect on credit if a recession does not occur in 2019?

• Credit will perform poorly

• Credit will remain stable

• Credit will perform well

• Credit will decline rapidly

What is a key factor that makes leverage loans attractive as mentioned in the fourth section?

• Floating rate aspect

• High default rates

• Low institutional demand

• Fixed interest rates

What is the expected impact of M&A activity on the loan market in 2019?

• Stability in loan demand

• Increase in cash deals

• Decrease in loan supply

• Rise in high yield loans

What is the concern related to the weighted average cost of capital in the context of leverage loans?

• It is stable and not concerning

• It is decreasing rapidly

• It is irrelevant to leverage loans

• It is rising to a concerning level