Bloomberg Surveillance · Thursday, August 27, 2026
Andrew Sheets expresses caution regarding credit risk, particularly in the investment-grade sector, citing heavy supply and resilient credit spreads. He notes that rising M&A volumes and CapEx, while supportive of equities, are less so for credit, suggesting better risk-reward in stocks.
“So we're currently a bit cautious on the credit side, certainly the investment grade side. I do think that supply remains very heavy and will remain heavy this year.”
“Credit spreads have been remarkably resilient. I mean, you have seen some widening in the AI-driven names, but the overall index is still pretty tight. So you're still looking at pretty rich valuations.”
“And I think we're also in a part of the economic cycle that is burning hotter and burning more aggressive. You have rising M & A volumes. You have rising levels of CapEx. You have a lot of excitement in markets. And that can be very supportive for equities. But it tends to be less supportive for credit when you get markets that are running hotter and seeing more aggressive activity.”