📜 Dispersion Revisited: Oaktree's Co-CEOs on a Widening Credit Market Split
Oaktree Capital's Co-CEOs Robert O'Leary and Armen Panossian warn that dispersion between winners and losers in credit markets is accelerating. CCC-rated loan spreads have widened over 300 bps this year while BB-rated loans yield just above 6%, roughly a quarter of CCC levels. Software and IT services now account for over 40% of distress in the senior loan market as AI disrupts legacy business models, and direct lending faces its own strains from rising PIK reliance and evergreen fund redemptions. With the sub-investment-grade credit universe at roughly $6 trillion and resurgent inflation keeping rates elevated, Oaktree sees growing opportunities for selective credit managers and opportunistic investors.
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