BusinessLine·2026-01-17 16:10Core Viewpoint - Global credit markets are experiencing their highest activity in two decades, with significant money managers warning against complacency regarding risks in the market [1][2]. Group 1: Market Conditions - Yield premiums on corporate debt have decreased to just over one percentage point, the lowest since June 2007, reflecting confidence in the economic outlook [1]. - The new issue concession for US companies is only 0.013 percentage points higher than existing bonds, significantly lower than the average of about 3 basis points from the previous year [4]. - Companies issued approximately $435 billion in bonds in the first half of January, a record for that period and over a third higher than last year's figures [9]. Group 2: Risk Factors - Money managers are facing a paradox where they want to participate in the market rally but must accept lower compensation for the risks associated with unpredictable US policy and geopolitical tensions [2][5]. - Barclays Plc's risk complacency signal in the US debt market reached 93%, the highest since December 2024, driven by bullish equities positioning and lower high-yield return volatility [3]. - There is a concern that the current tight credit spreads do not adequately account for geopolitical risks, as highlighted by investment professionals [7]. Group 3: Investment Strategies - Many money managers are continuing to invest in the rally, partly due to expectations of interest rate cuts by the Federal Reserve, which could support the global economy [5]. - Pacific Investment Management Co. is becoming more selective in fund deployment across credit markets due to expectations of deteriorating fundamentals [8]. - BlackRock Inc. is positioned to buy new deals while maintaining caution, emphasizing the need for returns despite the current market conditions [11].