JNK - Credit Where Credit Is Due: 4 Common Misconceptions In Public And Private Credit Markets

• For investors worried about continued higher policy rates, duration risk can be hedged to various degrees while allowing investors to retain exposure to the credit risk.
• Many issuers in bank loan and private credit markets issue floating rate instruments where the issuer is exposed to higher borrowing costs when interest rates rise.
• A common refrain in the leveraged finance market is that investors can have their cake and eat it too - you can buy a floating rate note, but don’t worry, the borrower swaps that floating rate into fixed so as to hedge against interest rate increases.

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