全球信用交易：人工智能供应或引发再杠杆化冲动-Global Credit Trader_ AI supply likely to fuel a re-leveraging impulse

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the credit market, particularly focusing on the impact of AI-related issuances and the performance of USD and EUR credit markets [1][2][3]. Core Insights and Arguments 1. AI-Related Issuance: - In 2023, AI-related issuances accounted for $180 billion in gross issuance, translating to $127 billion in net supply in the IG market and $9 billion in the HY market, representing 26% of overall USD net supply year to date [3][14][15]. - The trend of AI-related net supply is expected to continue, with projections of $670 billion in net supply for IG issuers in 2026 [14][31]. 2. Performance of US Equities vs. Credit: - Since April, US equities have outperformed their historical beta to both IG and HY markets, with the S&P 500 returning 11% while IG and HY spreads tightened by approximately 8bp and 17bp, respectively [4][5]. - The relative outperformance of US equities is anticipated to persist due to a narrow breadth of the equity rally, primarily driven by mega-cap tech firms [4]. 3. Market Dynamics: - USD IG new issue concessions have remained stable near 5bp since April, contrasting with EUR IG concessions which have compressed toward zero [20][24]. - The divergence in concessions is attributed to lower political uncertainty in Europe and strong but not accelerating EUR supply [20]. 4. Sector Performance: - In USD HY, sector-level dispersion has become a more significant source of alpha, while bond-level dispersion has decreased [25]. - The macro backdrop and policy uncertainty are driving uneven sector impacts, which are expected to persist [25]. 5. Valuation Constraints: - Valuations are expected to keep credit from matching the momentum of US equities, with starting valuations making upside in spreads increasingly asymmetric [4]. 6. Interest Rate and Credit Spread Correlation: - The correlation between rates and spreads has remained negative, indicating that rising Treasury yields do not necessarily lead to widening credit spreads [10][11]. Additional Important Insights - European Credit Market: - EUR credit has shown better resilience compared to equities, with the EURO STOXX 600 up 7% since July, while EUR IG and HY indices tightened by nearly 17bp and 30bp, respectively [5]. - The outlook for European equities is less optimistic compared to US equities, but the lower hurdle for credit to keep pace with European equities is noted [5]. - Default Rates and Forecasts: - The forecast for HY defaults is 3.0% for 2025, with a projected increase in fallen angels in both USD and EUR markets [32]. - Sector Contributions to AI-Related Issuance: - The Technology, Media, and Telecommunications (TMT) and Utilities sectors account for nearly 90% of AI-related net supply, with TMT alone representing 84% of net issuance across IG and HY markets [14][18]. This summary encapsulates the key points discussed in the conference call, highlighting the dynamics of the credit market, the influence of AI-related issuances, and the comparative performance of US and European equities.