Rising debt, weak growth highlight active selection

MFS
By September 16, 2020 07:54

Rising debt, weak growth highlight active selection

Winners vs. Losers in Credit

  • The extraordinary monetary and fiscal policy measures enacted during the pandemic have added further impetus to the trend of rising corporate debt and less stringent lending standards that began in the aftermath of the global financial crisis (GFC).
  • Debt sustainability is a concern as default rates are forecast to rise in the current recession, despite lower borrowing costs.
  • Investors seeking to replicate indices face the risk of holding rising numbers of low-quality "zombie companies".
  • Active management may be even more important during crises, as it potentially enables differentiation between the winners — companies that thrive — and the losers — companies that fail or only just survive.
MFS
By September 16, 2020 07:54

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