Capital IdeasTM

Investment insights from Capital Group

Why credit markets can keep running strong
Damien McCann
Fixed Income Portfolio Manager

Credit markets have remained robust, even as interest rates have soared to multi-decade highs.

In this interview, Capital Group portfolio manager Damien McCann explains why he expects this resilience to continue and discusses the opportunities he sees in multi-sector credit portfolios designed to generate income from a combination of corporate bonds, emerging markets debt and securitised credit.

Overall, McCann says this is a constructive backdrop for credit, with improved economic growth expected and inflation still coming down gradually. This is not to say credit fundamentals are fine everywhere, but problems are more idiosyncratic and tend to be ascribable to individual industries or issuers.

Technicals are also supportive: now rates are higher, borrowers are choosing to borrow less or for shorter periods of time. Higher rates are also creating more interest in credit from lenders and bond investors.

Investment-grade credit market has evolved and expanded

Amount Outstanding

Investment-grade credit market has evolved and expanded

Source: Bloomberg. Chart shows sector allocations within the Bloomberg US Corporate Investment Grade Index. Data as of 29 May 2024.

Damien McCann is a fixed income portfolio manager at Capital Group. He has 24 years of investment industry experience, all with Capital Group. Earlier in his career at Capital, he was a fixed income investment analyst and covered energy, leisure and lodging, and rails. He holds a bachelor's degree in business administration with an emphasis on finance from California State University, Northridge. He also holds the Chartered Financial Analyst® designation. Damien is based in Los Angeles.