Bloomberg: Beach Point, $17 Billion Manager, Eyes Distress in Credit
• Portfolio manager Bowron sees bifurcation among borrowers
• Credit funds are parsing through higher-for-longer picture
Beach Point Capital Management is eyeing opportunities to seize on a bifurcation in credit markets brewing as interest rates begin to weigh on risky borrowers.
“With half of high yield trading at spreads below 200 basis points, half of the loan market trading at prices greater than par, you still have that lower decile within both of these asset classes that is trading at stressed and distressed levels,” Sinjin Bowron, a portfolio manager at Beach Point, said Tuesday in a Bloomberg Television interview. “That leads to just credit volatility, but also potential opportunity as those situations develop.”
Beach Point, which manages about $17 billion, is among credit funds parsing through the impact of markets repricing expectations from six rate cuts this year to only one. Meanwhile, Federal Reserve Chairman Jerome Powell reiterated on Tuesday it could take longer to cut interest rates than initially expected.
Bowron said while credit fundamentals are largely holding up, some sectors are starting to show signs of troubles from a higher interest rate environment than experienced over the past decade. He’s also watching closely for where inflation is starting to bite into consumer wallets.
As far as capitalizing on distressed debts, “It’s something that we are being very tactical about at the moment,” he said. “There’s a heightened activity that coincides with interest rate cuts being priced out further.”