Global Insights

As observed most recently in the fourth quarter of 2018, credit (speculative grade loans and bonds) often declines in value during periods of market stress as though it sits pari passu with equity rather than senior to it in the capital structure. As we document in this paper, during the 2008-09 and 2015-16 (energy) market dislocations, creditors earned average total returns of 80% in the six-to-nine months following the market bottom, despite also enjoying a degree of implicit subordination…

In their new paper, Mark Jenkins and Jason Thomas find that middle-market loans have historically yielded one-third (170bp per year) more than large, bank-syndicated loans due largely to their illiquidity. Consequently, study results suggest that investors with the ability to hold loans to maturity can boost returns by increasing exposure to liquidity risk.

Robert Stuckey, Head of Carlyle U.S. Real Estate, discusses how he and his team built one of the most successful opportunistic real estate investing platforms in the U.S.

The era of accommodative monetary policy is over. The Fed is moving to neutral as fast as the economy can tolerate, but the fed funds rate at the end of this process may be much closer to current levels than many suppose.  If a late-cycle investment boom (and corresponding price pressures) does not materialize in 2019, neither should the three-to-four Fed rate hikes many investors now fear.