Co-Dependencies Drive Resolutions

Amidst a sea of headlines on tariffs, government overreach, recession, gold, & Bitcoin, the market narrative has become repetitive. Markets are reacting more to unstructured remarks from officials than to fundamentals. But if you cut through the noise, there’s a growing recognition of the deep economic codependencies between countries. While these interdependencies are often viewed as a source of risk—given the potential disruption from structural shifts—they also create strong incentives for resolution. We saw early signs of this earlier this week, with the U.S. making tangible progress in trade negotiations with India and signaling openness to further dialogue with China.

In high-stakes negotiations, both sides aim to claim victory—particularly when emotions run high. Much like performance attribution in asset management, where we attempt to separate skill from luck or market beta, these outcomes are hard to parse. Negotiators will attribute success to their craft, but ultimately, what matters is forward momentum and limiting damage.

What is happening in the Leveraged Credit Markets

Turning to leveraged credit—especially private credit—we’re seeing evidence of that same kind of resilience. A few sizable private credit deals were announced , talked at spreads in the mid/high 400 bps range. In a market overshadowed by geopolitical headlines, it’s encouraging to see private credit functioning effectively, stepping in where banks have a few hung deals. Meanwhile, the secondary broadly syndicated loan (BSL) market is reflecting wider spreads for similarly rated credits—particularly in the single-B and lower rating cohorts.

For private equity sponsors, the ability to toggle between public and private markets is a powerful lever. But for value-oriented and sophisticated institutional investors, the key question becomes: do you continue allocating to a private credit market priced for a steady-state economic environment, or do you lean into the dislocations in the public broadly syndicated leveraged loan market, where you can find similar credit profiles at much wider spreads?

BrightSpring Investment specializes in finding value in mispriced liquid & semi-liquid leveraged loans and high yield securities based on fundamental analysis. For more details, please visit www.brightspringinvestments.com

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