Latest Memo From Howard Marks: Gimme Credit

2025-03-07 08:00:00 ET

Summary

• The questions I get from clients enable me to understand in real time what’s on their minds.
• For a year or two, it’s been “can we talk about private credit?” and in the last few months, it’s “what about spreads?”.
• What’s been behind these returns, and where do they leave the credit sector?

The questions I get from clients enable me to understand in real time what's on their minds. At various points in the last ten years, the most frequently asked question was "when will the Fed raise/cut rates?" During crises, it's usually "what inning are we in?" For a year or two, it's been "can we talk about private credit?" And in the last few months, it's "what about spreads?"

Ever since interest rates got up off the floor in 2022, there's been increased interest in credit, and that's why I'm devoting this memo to it. It'll come a little closer than usual to "talking my book," but I think the subject justifies that. Most of my references will be to high yield bonds, where I have the most experience, there's the most data, and the fixed coupon rates make the explanations most straightforward. But the points I'll make are applicable to credit in general....

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