Credit Lens USD

The Schroders Credit Lens for May 2026 highlights that credit spreads have returned to exceptionally tight levels, though demand remains robust due to attractive yields versus cash. It specifically notes rising stress in US High Yield and a surge in bond issuance from Big Tech 'hyperscalers'.

Key Takeaways

• 1.Credit spreads have returned to exceptionally tight historical levels, leaving a very small margin of safety for investors.
• 2.Corporate fundamentals remain generally supportive, but default rates in US High Yield are beginning to rise and 'fallen angels' are outstripping 'rising stars'.
• 3.Large-scale bond issuance from 'hyperscaler' technology companies is a major market theme, reshaping indices and spread dynamics.

Table of Contents

• Summary
• Cross-credit analysis
• IG long vs short
• Corporate credit: valuation
• Corporate credit: fundamentals and technicals

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