April 3, 2025 • 45 mins
Retail investors aren’t yet ready to jump on the private credit bandwagon, according to Janus Henderson. “The skepticism there should be real,” John Kerschner, the firm’s head of US securitized products, talking about exchange-traded funds focused on direct lending. “The underlying isn’t nearly as liquid and hasn’t really been tested throughout a real dislocation credit cycle,” Kerschner tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Spencer Cutter in the latest Credit Edge podcast. Kerschner and Cutter also discuss the outlook for the US economy and consumers, collateralized loan obligations, relative value in securitized credit and fund flows.
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Episode Transcript
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Speaker 1 (00:17):
Hello, Welcome to the Credit Edge, a weekly markets podcast.
My name is James Crumby. I'm a senior editor at Bloomberg.
Speaker 2 (00:23):
Hi, and I'm Spencer Cutter. I'm a senior credit analyst
covering the energy sector with Bloomberg Intelligence. This week, we're
very pleased to welcome John Kirshner, head of US securitized
Products and portfolio manager at Janis Henderson.
Speaker 3 (00:36):
John, how are you great?
Speaker 4 (00:38):
Thanks for having me pleasure to.
Speaker 2 (00:39):
Be here, great, thanks for joining us. For those of
you who are listening are not familiar with John, he's
a portfolio manager for a number of fixed income and
securitized ETFs at Janis Henderson, including the troll A Clo ETF,
which is the largest collateralized loan obligation ETF at.
Speaker 3 (00:54):
Over twenty billion in assets on our management.
Speaker 2 (00:56):
He also runs a Janis Henderson Mortgage Backed Securities ETF,
which is the largest actively managed mortgage backed securities et
at over five billion.
Speaker 1 (01:05):
Thank you, Spencer. Thank you for also spelling out collasteralized
loan obligations.
Speaker 4 (01:09):
No acronyms. I've been told.
Speaker 1 (01:12):
Keep it simple, so just to set the same before
we dig in. Global markets are getting whipswored by recession
fears and haphazard and erratic US policy making, particularly on trade.
Despite that credit spreads are quite tight across the board,
including structured finance, there's the hope that the longer term
trajectory of the US economy remains up despite some short
term pain and volatility. Market optimists believe the new administration
(01:34):
has their back and will do its best to defend
the economy, that everything will be okay in the end.
Bond and loan markets are pricing in very low odds
of a US recession, even as talk of economic downturn
even stagflation become more frequent, with consumers throwing in the
towel and business leaders putting investments on hold complaining that
they can't take long term decisions in this environment. Treasury
(01:55):
yields remain high, keeping buyers of fixed income happy, especially
those with floating rate assets. Above all, there's not enough
supply of corporate debt to satisfy the growing demand. But John,
what's your view, how does this all affect structured finance
markets and what's the drawer of things like clos in
these times of heightened volatility and stress?
Speaker 5 (02:13):
Yeah, Well, this is the big discussion flash argument of
the last month. Right, the new administration has added some
uncertainty to the overall economy and economic outlook. But I
think what people have to keep in mind is since
COVID we've been running massive deficits, right over ten percent
(02:36):
during COVID and even this past year about seven percent,
and that's not sustainable. So it's somewhat painful to dial
that down to a more normal level of three percent.
But this administration seems very motivated to do that. So
I think when people are out there saying, oh, well,
Biden's economy was so strong and now Trump or you know,
(02:58):
the White House is mucking them up, I think you
have to consider that. You know, what was going on
under the Biden administration was again not sustainable. But you know,
to your point, there have been a lot of people
now calling for a recession, and I think people have
to parse out like are people really rooting for a
(03:19):
recession because they don't like the current president or do
they really think it's going to be a recession. And
quite frankly, we just don't see the recession in the cards. Yes,
the soft data has gotten worse, like things like consumer
confidence and business confidence, but the hard data is still
pointing to a fairly strong economy. Now Q one GDP
(03:42):
will be lower than what we've seen. GDP has been
quite strong over the last couple of years, close to
three percent since twenty twenty two. This quarter is going
to be lower, probably about one percent, but that does
not mean a recession. And we're really looking at three things.
Number One is over all hard data, so like initial
(04:02):
jobless claims that really hasn't moved for years. And yes,
there might be a little blip in the DC area
that's to be expected with what's going on, but that
is has been traditionally the best indicator of recession going forward,
and we just haven't seen that move. Two, we're looking
at spreads in our sectors. So JP Morgan had a
(04:25):
very good piece this past week talking about when stocks
go down ten percent, what would you expect in securitized
products and investment grade and high yield credit as well.
And for example, stocks go down ten percent, you expect
mortgages be out twenty five basis points.
Speaker 4 (04:42):
They were out five basis points.
Speaker 5 (04:44):
You expect triple B autos out one hundred and twenty
five batises points. They've been out fifteen basis points and
high beta sectors like use cor credit or triple Bcnah,
it should be out two hundred and fifty to three
hundred basis points and they've only been out like fifty
five to seventy basis points. And then finally we actually
look at the prediction markets like polymarket and polymarket beginning
(05:07):
of the year was like twenty twenty five percent recession
probability for twenty twenty five. That's a baseline level. Today
it's about thirty two percent, so slightly higher, but nowhere
near the fifty to sixty percent that other people are
talking about.
Speaker 2 (05:21):
Quick question, sticking with the sort of high level economic
focus before digging into specific market trends. There's a reason
an article came out talking to a United States is
basically a consumer driven economy, right, And there was an
article that came out and study, I think there's Moodies
that ran it. Basically that the wealthiest ten percent of households,
which are households making more than two hundred and fifty
(05:43):
thousand dollars a year, is now driving fifty percent of
all consumer spending, which has grown pretty dramatically over the
last couple of years.
Speaker 3 (05:51):
And then that just means that the spending from the
other ninety percent of the household is somewhat anemic.
Speaker 2 (05:57):
Is that something that is on your radars in terms
of cause for concern for the overall economy or as
long as spending overall stays strong, and that's kind of
what matters.
Speaker 4 (06:09):
Yeah, like two points there.
Speaker 5 (06:11):
You hear the stat all the time that seventy percent
of the economy is driven by the consumer, and that
is true, but it also includes things like healthcare, right,
and no one is really spending discretionarily on healthcare. So
I just want to clear that up because I think
that's the most overuse statistic that I hear. But it
(06:32):
is true that consumer spending is very important to this economy,
and it is true that the wealthiest ten percent or
one third are however you want to split that demographic
is driving most of it. Now, I do not want
to minimize the pain that lower the lowering consumer is facing.
Speaker 4 (06:53):
Right.
Speaker 5 (06:54):
Inflation hurts the lower end consumer much much more than
the higher end consumer, just because they don't have as
much discretionary income. So things like food prices, obviously, egg prices,
gas prices, things like that that hurts, and so I
do not want to minimize that, but if you look
at the lowest one third of the economy, it's only
(07:15):
like fifteen percent of discretionary spending or consumer spending.
Speaker 4 (07:20):
And so yeah, when you're really.
Speaker 5 (07:22):
Thinking about what's going to move the overall economy, you
have to look at the you know, the top ten
or top third or however you want to divide it.
And those people are continuing to spend, their continuing to travel,
They're continuing to kind of run this economy, move this economy.
So that's really what's driving I think our outlook as
(07:45):
far as what's going to happen to gdb GDP growth
going forward.
Speaker 1 (07:49):
But that scenario kind of just no Fed rate cuts
this year, is that what you're expecting.
Speaker 5 (07:54):
So if there are going to be cuts, it's going
to be at the back end of the year, So,
you know, eight nine months, it's hard to say. I
think Chair Paul when he was had his press conference
last week pretty much said the same thing. Look, they
they can be patient. Right, Unemployment has moved up a
little bit from the lows, but still four point one percent,
(08:15):
still very low historically. And so if I'm Chair Paul,
he's done in a year. Basically, his legacy is that
he took inflation that was running depending on how you measure,
at seven to nine percent and brought it down to
you know, two and a half three percent. And now
with tariffs, maybe it notches up a little bit, but
(08:38):
he does not want to ruin that legacy. And if
there's no you know, the FED has a dual mandate, right,
stable prices and full employment, and we're kind of at
full employment and we're not quite at his target of
two percent inflation. So yeah, I think they will be patient,
and that speaks very well for you know, to kind
(09:00):
of move into the product pitch like floating rate securities
and clateralized loan obligation ETFs that we're obviously a big
fans of.
Speaker 2 (09:08):
You mentioned Powell and his impact on rates and whether
he'll cut rates or not, and what's happened We now
have another voice in the market, Treasury Secretary talking about
his desire to bring down yield on the tenure.
Speaker 3 (09:20):
Treasury specifically seems to be targeting that he.
Speaker 2 (09:23):
Doesn't have the levers to pull that Powell does. But
does that influence your decision or what would you see there?
Is that something that you would see impact in the
market or your decisions or outlook and where rates would go.
Speaker 5 (09:36):
Well, yeah, you ignore the Secretary of Treasury at your peril, right,
And people say, well, what can you really do? Like
he's not moving short term rates like the feed is,
but just him out there kind of talking about wanting
lower rates, I think is important and material. And look,
they can change the auction schedule and the size of
(09:58):
the auctions. They can move auctions more into the short
end of the curve. So there are some things they
can do on the margin, and I would expect the
market to take them at his word that they're focused
more on what's going on with the treasury market than
the equity market. So what this really if you have
the Treasury Secretary is saying we want the tenure treasury
(10:19):
lower because that affects a lot of borrowing, particularly mortgages
and commercial real estate. And you know, there really hasn't
been a lot of volatility in the tenures so far
this year, and you have the FED on hold. Basically
that argues for a flatter ye'll curve. And you know,
if you ask me what my projecting is a year forward,
(10:42):
I think maybe we do have one or two FED
cuts later on this year, maybe get to kind of
high three percent. But you know, the tenure Treasury right
now is looking pretty fair to us, so I think
the ye'll curve gets a little steeper, but not materially.
Speaker 2 (10:59):
So yeah, one sort of reaction I've heard people talk about,
you can move around the Treasury can move around the auctions,
whether they're going to do five year versus ten year,
twelve over twenty and potentially bring down the ten yere
I guess bring down the ten year rate relatively speaking
due to some sort of scarcity there because you're pushing
(11:19):
the auctions into other maturities. But then I guess I
question whether that would really have an impact on mortgage
rates if you end up with sort of an S
curve where the Treasury issues more five and seven year
notes and more fifteen year notes, but not any ten
year notes, so you kind of had a dip in there.
(11:40):
Are lenders really going to look past that dip and
focus just on a tenure. Theyre going to look more
at the curve and say, Okay, well this is kind
of artificial, and I'm going to look more at what's
the average curve between the seven and twelve or seven
fifteen year versus just the potentially artificially low ten years.
I mean, I don't know, that's my first reaction when
I hear that scenario.
Speaker 5 (12:00):
Yeah, it's an excellent question, and you get into the
nuances as like how do they actually set mortgage rates
and what's driving that? Right, And there's something called the
primary secondary spread between where actually mortage backed securities trade
and where mortgages are actually offered two borrowers out there.
But really what's driving it, yes, is the entire curve,
(12:25):
So you're right about that, But maybe more importantly is
volatility in the rates market. Right, like mortgages, we have
this kind of unique structure of our mortgage finance market,
which is a thirty year fixed rate, fully pre payable instrument.
Like no other country has this, and the only reason
(12:45):
we do have this is because of Fannie Mae and
Freddie mac Like. Banks don't really want to lend for
thirty years, particularly at a fixed rate, because on the
other side of their balance sheet or deposits, which you know,
based on Silicon Valley bank we know are not as
long to ration as a lot of people thought they were.
But banks can basically use Fanny and Freddie and get
(13:07):
mortgages off their balance sheet and sell them to investors
like Janis Henderson. So it's much more important that interest
rates are less volatile and stable. And what the Treasury
Secretary Scott Benson is doing is saying like we're going
to take out some of that volatility. And I don't
(13:28):
want to lead your listeners to believe like this is
a massive thing. It's definitely on the margin, but it
will help bring down those mortgage spreads over time because
the mortgage investors have to worry less about volatility, and
so that helps being able to project things like prepayments,
and that will cause mortgage spreads to be a little
(13:49):
bit tighter on the margin. So I have no doubt
if that happens that the Treasury Secretary in the White
House will take credit for it. But you know, it
affects a lot of people there. I mean, we've seen
overall supply of homes go up, and yet demand for
homes really hasn't gotten there because mortgage rates are still
(14:11):
kind of mid sixes. I think mortgage rates got down,
you know, for whatever reason, humans really love round numbers,
and if it gets down to a five handle you know,
upper five percent, You're going to see a lot of
buyers come in because it's just will be a regime change,
and that will even though housing's still doing pretty well.
We got some housing numbers this morning and home prices
(14:32):
have been up four percent. I think that will really
help affordability and continue to keep housing markets strong.
Speaker 1 (14:40):
Let's talk about the CLOS John though, you know you
run the biggest ETF. You know, it's a retail vehicle.
Four collateralized loan obligations which we bundled up loans to
companies leverage loans mostly so you know, on the risky side.
You know, when I first talked to people about the
concept of an ETF for clos, this is this is
(15:00):
going back, you know, more than a decade. They told
me I was crazy for reading suggesting it. Somehow you've
made a success of it.
Speaker 3 (15:06):
You know.
Speaker 1 (15:06):
The main sort of worry was that there was no
liquidity and then you know there was a mismatch there
for the retail participant and it was still going to
end in tears. Talk us through how this works, why
it matts is now and you know why it's not
really that risky.
Speaker 5 (15:21):
Yeah, well, you're not the only one that was told
that this is crazy. We got told that many times
from competitors and the press and even some of our investors.
But look, we are large investors in Colos before we
launched these products, and Jade Triple A was launched in
October of twenty twenty based on our experience through COVID
(15:44):
with Colos, So we have obviously many other portfolios. I
manage a multisector income portfolio, think of it as a
fixed income portfolio. That's best ideas. We held Triple A
Colos in that portfolio for liquidity purposes.
Speaker 4 (15:59):
When COVID hit, we had.
Speaker 5 (16:01):
To sell some Colos to raise some liquidity in the portfolio.
We sold three different batches end of February twenty twenty,
early March twenty twenty, and then on one of the
worst days during COVID, which was March twenty fourth of
twenty twenty, with you know, probably the worst day that
was a Tuesday. The worst day was Monday because that
(16:22):
Sunday there were actually a lot of hedge funds and
opportunity funds that got on wound. They tried to do
bid lists on a Sunday. I had never seen that
before in my thirty year plus career of trading bonds,
and so Monday come in really tough market, stocks downs,
bond spreads wider. So we didn't sell that day, but
we did sell on Tuesday, and we sold about fifty
(16:43):
million of triple A colos in eight different ln items.
We had many bids for each line item. We sold
the entire lot. There was probably two out of the
markets that you could have sold that much on that day,
and that's US treasuries and agency mortgages, IG corporate credit.
No high yield, definitely not Maybe if you had a
(17:04):
very short way to average life, like triple A credit
card or something, maybe, but it just showed to us
like the liquidities here, and why is that Because there's
never been a default in a triple A colo in
over thirty years, so it's not really a credit product.
And when they started trading mid nineties with a three
percent yield and a very short weighted average life, there
(17:26):
was all sorts, sorts of money, and you know funds
that had dry powder that said, wow, I can get
high single digits, maybe even double digits on a triple
A COLO. I don't know what's going to happen with COVID.
I don't know what's going to happen with equities, I
don't know what's going to happen to the economy, but
I'm very confident that these securities are actually going to
(17:49):
perform well. And if I can get those kind of returns,
I'm going to buy them and let the air clear,
let you know, figure out what's going on, and then
you know, I can sell them later. And so given
that experience and the fact that it's a one point
one trillion dollar market, a lot of people don't realize that,
by comparison, the high yield corporate bond market is only
about one point three to one point four trillion. It's
(18:11):
almost as big as the high yield corporate bond market
and growing while the high corporate bond market is shrinking.
Another two hundred and fifty billion of euro colos, some
of the best investment managers in the world are issuing colos.
There's over one hundred managers that issue every year. This
is a much bigger, much more liquid, much wider market
(18:34):
than people appreciate, and that's what gave us the confidence
that we could launch an ETF wrapper around it. And
nowadays we're we are seeing days where we'll have you know,
half a billion either trade on the buy side or
the cell side, and we won't even get a create
or redeem because of the underlying liquidity is so good.
Speaker 4 (18:58):
So it's it's.
Speaker 5 (19:00):
Worked out as we expected, but I think a lot
better than that a lot of people expected when we
launched J Triple A.
Speaker 1 (19:06):
Okay, we've been following the fun flows a little bit
over the last few days. You know that there have
been some slowdown because of growth fiars, I think Bank
of America flegg that essentially the higher rats STUF seems
to be getting some mainflow while the risky of funds
that the Triple B's losing some is that a flight
to safety and also your fund The J Triple A
saw a big outflow, you know, half a billion very recently.
(19:28):
What's that all about?
Speaker 5 (19:30):
Yeah, so two things. Let's address the first point. Yes,
J Triple B is probably down about that's our triple
B colo E TF got over two billion. It's down
a couple hundred million since then, down about you know,
ten twelve percent something like that. But we compare that
(19:50):
product to the leverage loan ETFs because that's what category
it's in. It's its main competitors. And if you look
at the big leverage loan ETFs, they're down in AU
on a BU twenty percent. So we're actually pretty happy
that we knew if there was a dislocation. Look, obviously
there are investors in there that are just you know,
riding the wave of risk on and as soon as
(20:12):
kind of things got a little shaky, they'd leave more
fast money. You know, it's not necessarily what we want
as far as investors, but you know, you take that
and realize that that is going to happen. And if
you had told me, like stocks are going to be
down ten percent, what's going to happen with J triple B?
I would have been perfectly happy with what we've seen.
(20:33):
And actually it's very interesting in Cololand. The mezzanine part
of the capital stack, so like let's just call triple
b's Single a's have held in better than the triple
A part of the capital stack. Obviously they've widened more,
but on a risk adjusted basis, they've held in better.
And that's really coming from the inflows that insurance companies
(20:55):
are getting. In insurance companies like investment grade, that mezzanine
part of the capital stack, and so they're continuing to
be buyers. And now as far as J triple A, look,
we still are plus five billion on the year, we're
up fourteen billion over one year. We're basically flat for
the month of March. We have learned that there were
(21:19):
some investors actually buying J triple A and putting some
leverage on it, which, you know, isn't that surprising because
when spreads are very very tight, a lot of these
you know, hedge funds are levered total return investors or
absolute return investors. That's what they'll do, right, because they
don't want to reach for yield by buying something that's
(21:41):
you know, the spreads are historically tight. They'd rather buy
something that's lower risk, put a couple turns of leverage
on it, figuring that if things do blow out, that
that actual that triple A type security with a little
leverage will actually perform better. So so that's just.
Speaker 4 (21:59):
A little leverage coming out of it.
Speaker 5 (22:00):
Again, like I said, we there were days where we
had some outflows but we didn't even see We saw
the trades as cells, but we didn't even see redeems.
And one other thing we should talk about is when
and investors sells. Basically, the the market maker can short
(22:22):
the shares to them or they can do a cash
redeem or an in kind redeem. So cash redem is
just as it sounds. We end up getting cash withdrawals
and then we have to sell colos to meet that.
But in kind means that we're just trading shares for clos.
So what a dealer will do they are you know,
(22:43):
our holdings are public. You can see them on Bloomberg
on a day by day basis. Dealer will go in
there and say we want these five clos and we
want to give you shares in returns. So that's an
in kind redeem. The nice thing about that because we
don't have to sell, there's really no bid ass there,
and it's it's more frictionless, right, and that keeps the
(23:07):
n a V of the ETF from getting too far
out of line with the underlying value or where the
portfolio is trading. So we've seen a lot more in
kind both creates and redeems, again just showing the liquidity
of these products. And again I think there's if you
(23:27):
look at you know, the price line or whatever, it's
not as volatile as a lot of people would think
because of this mechanism.
Speaker 1 (23:35):
Yeah, well, Spencer and Night with credit guys, we weary
all the time. But everything so when we see the
biggest outflow ever from the biggest Triple A clof should
we not panic?
Speaker 4 (23:45):
You should not panic.
Speaker 5 (23:47):
Literally, the triple A CLO market trades billions of dollars
a week. I'm not saying a you know, a half
a billion you know flow isn't big. But during the
UK l d I crisis, there was one line item
of a two hundred and seventy five million dollars COLO
that traded and the market didn't even blink.
Speaker 3 (24:07):
You know.
Speaker 5 (24:08):
It's like this market is so deep and there's such
a bid from end investors that even size which is
you know size open s eyes right, like even size
like that is is fairly easily digested by the market.
So we obviously get a lot of questions about this,
both internally and externally, and we have now we've had
(24:31):
several instances where we've gotten major inflows from you know,
end investors and now some outflows. And again, like the
market is functioning as advertised and it's really not pushing
around the price. And like I said, the the you know,
the richness or cheapness to nav you know, sometimes it
(24:53):
trades a little cheap or rich, but not like it's
like pennies or maybe you know, ten cents, fifteen cents.
It's not like points like we saw during COVID. So
I understand the concern or worry or or the you know, inspection,
but it is it is performing as advertised, and we
have many examples. If anybody wants to reach out to
(25:16):
Janis Henderson, our capital markets team is world class. We
can walk them through the actual numbers and put them
at ease.
Speaker 2 (25:23):
I'm going to reveal my age here and say that
my prior life before Bloomberg, I was working in the
leverage finance group at Lehman Brothers in the early two
thousands or underwriting leverage loans, a lot of which were
being syndicated to the then growing CLO market. The big
controversy or issue at the time was Covenant Light that
(25:44):
was starting to sort of make its way into the market.
I'm not going to ask you about that now because
it seems like that Ship of Salem that's pretty much
a standard.
Speaker 3 (25:53):
But something we.
Speaker 2 (25:53):
Didn't have to deal with as much back then was
private credit. It seems like, you know, every week there's
a new headline on some new fund putting billions of
dollars into private loans.
Speaker 3 (26:07):
Is that having an impact on the COLO market?
Speaker 2 (26:09):
Does that take away the supply that you could otherwise
have and put into a clo. What's the outlook or
the impact from the private credit market and growth of
that side versus the COLO market?
Speaker 3 (26:22):
What does that do to your product?
Speaker 5 (26:24):
Yeah, so it's a very good question. I want to
be very clear that private credit has got an incredible
amount of attention and press over the last couple of years,
just because it used to be kind of this sideshow
of a sideshow, like colos were a little bit of
a sideshow and private credit colos were a sideshow. But
private credit is definitely here to stay, right, It's depending
(26:46):
on who you ask, somewhere around seven hundred and fifty
billion to a trillion dollar asset class. It's growing, It
is taking some share away from the public markets. It's
why one of the reasons, like I mentioned before, how
you'll corporate credit is shrinking. But last year we actually
saw some deals that or firms that had gone the
(27:08):
private route come back to the public route. So there's
pluses and minuses on both sides. Our view is when
you look at private cress, so there's private credit loans,
and then now we have private credit clos and now
we even have some private credit COLO ETF. So you
(27:28):
know the three or the three derivatives of that market,
and so private credit definitely here to stay. There's some
very good managers here that do that, that know what
they're doing, no worries or complaints. Besides that, investors, if
they're investing in that market, they have to understand it
(27:48):
comes with the lack of transparency and a lack of liquidity, right,
and there.
Speaker 4 (27:53):
Are reasons for that.
Speaker 5 (27:55):
I'm not saying that's necessarily bad, because it also comes
with wider spreads, more covenants. Your local private credit manager
will be able to sing the praises of that market,
but I think investors have to be aware of that.
Private credit colos were very, very small till twenty twenty four,
when I think they issued about forty billion, whereas the
(28:17):
what we call the BSL broadly syndicated loan COLO market
was about one hundred little over one hundred, maybe one
hundred twenty hundred and thirty billion, So it used to
be about five to ten percent of the BSL market,
and all of a sudden it was about twenty five,
maybe even thirty percent of the BSL market. So Wall
Street was talking about a lot and how this was
(28:40):
going to grow, and it will grow, but private credit
colos are still a much smaller, less liquid market. Like
I mentioned, in any given week, the broadly syndicated loan
COLO market will trade billions, and the private credits market
(29:00):
will trade two to five percent of that. It's really
like tens to twenty millions. So the liquidity isn't even close.
It's just a fraction. And so when these issuers came
out and obviously we're not doing this, but came out
with private credit colo ETFs, you know, I think this
(29:21):
skepticism there should be real because the underlying isn't nearly
as liquid and hasn't really been tested throughout a real
dislocation credit cycle, et cetera, et cetera. And one of
the problems with private credit as well. And again like
if you go out and talk to these managers, I'm
(29:43):
not trying to, you know, say that they're not doing
the right thing or they're not doing the appropriate thing,
but bank of America had a recent piece where they
showed one loan in particular and six different managers, and
as this loan went through it it's you know problem
cycle default cycle. Different managers had it marked very differently,
(30:06):
like one manager had it marked in the mid to
high nineties, one manager had it marked at seventy. Now again,
I'm sure if you go talk to those managers they
will have very cojent arguments about where they were marking it.
But it doesn't have the transparency that you see in
the broadly syndicated loan market, which means any kind of
derivative security, whether it's a COLO or COLO ETF is
(30:30):
not going to have the same liquidity. So that's what's
going on with private credit. We have decided not to
go into that market for the reasons I just talked about.
What we're most concerned with that Janis Henderson, is our
client experience and our client promise. Right, the only unhappy
client should be one where we break our client promise
(30:51):
or we don't explain it properly. And so what we
have said with Triple A's Colos j Triple A, Jerry
Triple B that the liquidity's actually there even in dislocated markets,
and so far that it's proven to be true.
Speaker 2 (31:04):
I get as a quick follow up, as the private
credit market grows and becomes more mature and tested, is
it possible that that you guys would go into that
or even that the two markets kind of merge from
the clo standpoint and that now you have clos that
have both broadly syndicated loans and private loans in them
(31:25):
and you're not really bifurcating between the two. Or is
that just a bridge too far.
Speaker 5 (31:29):
Yeah, I think the latter is a possibility, but it
also there's there's also always a danger to taking these
products and making them too complicated, right invest Most of
our investors that are you know, either you know, retail
s like financial advisors or even the bigger kind of
(31:52):
asset allocators, they love the fact that they know what
they're getting with J triple A and J triple B.
There it's a very simple. Yes, we have levers to
add alpha, but we're you know, we're in triple A
clos at least ninety percent for J triple A. We
can go down to single A for ten percent vote,
but that is not a given right now. I think
(32:13):
we're below triple A, we're less than one percent. J
triple B can go below triple B for fifteen percent,
but right now we're all triple B. So we keep
it very plain, vanilla and simple for a reason because
I think whenever you add that layer of complexity, you
always have to ask ask as an investor, well what
am I missing? Why am I why are they doing this?
(32:35):
You know, if I want private credit, I should be
able to get that in its own wrapper. Like when
you start getting this mixture, it's kind of like I
don't really know what I'm getting, and that's going to
scare off a lot of investors. Never say never. As
far as Janis Henderson doing a private credit COLO ETF,
(32:57):
we have no plans on doing it. We're more focused
on the global market. Currently. We have a European clo
ETF and and you know, there are certain investors that
either can't or won't buy the US clo ets because
withholding taxes, and we are working on products to kind
(33:18):
of satisfy those investors. So that's really taking what we're
doing in the US with J triple A and J
triple B and taking that to.
Speaker 4 (33:26):
A more global audience. Is really where we're focused now.
Speaker 1 (33:30):
Before we get to even the private credit clo ETF,
we have to do the private credit ETF. Does that
make sense as a concept.
Speaker 4 (33:35):
Do you think I?
Speaker 5 (33:36):
I'm somewhat skeptical of it for the reasons I just
mentioned again. You know, I don't want to be here
like I'm my high horse saying that private credit is bad.
I just worry about the liquidity in an ETF rapper
and how that's going to work. I really think if
you want private credit credit doing in a BBC business
(33:56):
development company, you know, like a different wrapper where the
investor really knows, you know, how they get in, how
they get out, fees they're paying, things like that, I
really think that is a better vehicle for that type
of product.
Speaker 1 (34:11):
Okay, on this show, for many months now, we've been
talking about the potential for mispriced risk across the board.
Given the huge what seems to be a demand supply
in balance that's obviously happening in the loan market. There
isn't a lot of net supply, and there seems to
be not much prospect of M and A coming to
(34:31):
provide new net supply, so it gets tighter and tighter
the demands ramping up. People want these assets, they want
the yield. But you know, so what do you do
in that situation? I mean, is it do you just
buy anything because you have to, or do you have
to substitute in other things like high eeld bonds or
what's the solution to all this?
Speaker 4 (34:48):
Well?
Speaker 5 (34:48):
Right, and that has been the big issue over the
last couple of years. As you know, we came out
of COVID and spread Scott tighter and tighter, and a
lot of that is technicals. Right when you go back
and think about when's the last time when spreads were
just really attractive. That was kind of twenty I mean,
obviously COVID, but then we came out of COVID, But
it was really once we kind of had some idea
(35:10):
of what was going to happen with COVID and it
was going to eventually decrease and go away. It was
really twenty twenty two, right, and two things were happening. Obviously,
fed raising rates, bond markets sold off. Money managers normally
get about one hundred billion a quarter in inflows. They
were getting just the opposite in twenty twenty two. So
(35:32):
instead of net inflows, they were getting net outflows. That
meant there was for sellings. Because of that, the technicals
were pretty horrible. Money managers had to sell, you know,
you got to meet redemptions. And then at the same time,
there were calls for a recession, right, and we never
really necessarily believe those calls for a recession, but pretty
(35:54):
much everybody out there was saying, you know, fifty percent,
sixty percent chance of recession. And why is that? Because
usually recoveries and for one of two reasons, it's either
too much leverage in the system. Think about the dot
com burst or think about the GFC.
Speaker 3 (36:13):
Right.
Speaker 5 (36:13):
These are typical recessions where you just have a risk
on market and then people put leverage on that, and
then you have leverage on leverage and eventually that has
to end and kind of removing that leverage on winding
that leverage causes the recession or some exogenous shock like COVID.
Speaker 4 (36:32):
Right.
Speaker 5 (36:34):
But in the past, we've also seen the FED raise
rates and continue to raise rates and just keep them
too high for too long until it's too late. Because
we know that FED policy acts.
Speaker 4 (36:49):
On long and variable legs.
Speaker 5 (36:50):
Right, That's the phrase they always use. No one really
knows what that means or how long is long and
how variable is variable?
Speaker 4 (36:58):
But we know that.
Speaker 5 (36:59):
It's not, you know, a precise instrument, even though the
FED makes it seem like that with twenty five basis
points hikes or.
Speaker 4 (37:10):
Reductions.
Speaker 5 (37:10):
So so usually the FED just hikes too much, keeps
it too long, and then the economy starts slowing and
by the time they start cutting rates, the economy slows
down goes in a recession. And so that's what a
lot of people thought was going to happen, and it
turned out not to be the case.
Speaker 4 (37:26):
So yeah, I just.
Speaker 5 (37:29):
Think that overall that when you look at this market,
people were getting inflows they had to buy. And I
think the interesting thing is, you know, if you're a
high yield manager, right and highyield spreads are tight and
you're getting inflows, you still have to buy high yield,
right and there you know by you know the dictum
(37:52):
of your overall portfolio, and fun that's what you have
to do. The nice thing about what we do in
securitized products. Yes, we have Colo products that are like
I said, simple, and so we have to buy colos
in those, but we have Janis Henderson Securitized Incdom that
can buy kind of across securitized products. I run a
(38:13):
multi sector income fund. Like I said, it's kind of
the best ideas and the nice thing about securitized product
there's still some very interesting, relatively cheap sectors within there,
particularly within the commercial real estate sector, but also within
ABS and even non agency rbs like home equity type securities.
(38:34):
It's a relatively new market. They have been trading relatively
cheap to a lot of other products out there. And
so in these instances where you know, kind of the
headline products maybe if you look at like prime auto
ABS or you know, HYO corporate credit or IG corporate credit,
you have to have the you know, ability to price
(38:57):
risk in other markets and to go into those other
markets to find relative value.
Speaker 1 (39:02):
You mentioned relative value, John, which caught my ear because
everyone's been telling us everything so expensive for so long.
So the old idea that something might be cheap will
come as a surprise to some of our previous guests.
But where is the best relative value right now? And
you know, what's what's the opportunity view?
Speaker 5 (39:16):
I mean, I think with it if you look at
there's a couple of the different things, like if you
really think tariffs are going to bite that the Fed is,
you know, going to be on hold for longer, higher
for longer, and you know that that is not a
bad view. I would agree with that view in certain respects.
Then you know, we still like colos because if you
(39:37):
look at you know, triple A colos got as tight
as one ten one point fifteen, they wind out about
fifteen basis points, maybe twenty basis points depending.
Speaker 4 (39:49):
On the manager. That's still pretty.
Speaker 5 (39:51):
Good relative value, particularly when you look at investment grade
corporate credit and it's it's it's a hedge against high rates.
Right like when you look back at twenty twenty two,
like so many investors had such a bad experience because
for the twenty years before that, they used to negative
correlation between stocks and bonds. Right when stocks went up, bonds,
(40:14):
you know, rates went up, so bond prices went down
and vice versa. Like during COVID, stocks went down, but
yields went down, so bond prices at least for like
mortgages and treasuries went up. All said, in twenty twenty two,
because inflation was high, that negative correlation turned into positive correlations.
So stocks went down, rates went up as the FED
(40:34):
was raising rates and bond prices went down as well.
A lot of investors, you know, came to us and said,
thank goodness for J triple A was the one thing
in my portfolio that was actually positive.
Speaker 4 (40:46):
On the year.
Speaker 5 (40:46):
So if you have a concern that again the terarifts
are going to bite, that maybe maybe the Fed doesn't
cut rates, maybe they actually have to hike rates. Not
our baseline call, but possibility. At absolutely J triple A
still you're getting kind of mid five type yields triple
A credit quality floating rate. It's a good hedge to
(41:09):
any portfolio because the vast majority of fixed income in
the US is fixed, and it offsets that as very
low correlation. If you want to take a little more risk,
get a little more yield J triple B. But we
want to make sure investors realize that the volatility in
J triple B is probably four x J triple a.
It's not quite equity volatility, but it's definitely higher volatility.
(41:34):
So the second part, we still like agency mortgages. They
never got as tight as a lot of sectors. Some
of that is due with technicals, some of it has
to do with volatility and interest rates. Some of that
has to do with bank regulations and what we saw
even two years back with Silicon Valley Bank.
Speaker 4 (41:53):
But still, you know.
Speaker 5 (41:55):
Fanny and Freddie Awards of the State for all intents
and purposes, government gearing, you're still getting, you know, on
a vall, if you take out volatility vowel adjusted bases,
you're still getting one hundred and thirty one hundred and
thirty five bas points over treasuries. We think that looks good.
And then finally CNBS. This has been an unloved sector. Obviously,
(42:18):
the office sector has gone through all sorts of pain.
But what we see is because of that, there's there's
actually a lot of opportunity in this sector because they're
investors that just have stepped away from this market, and
you're seeing great buildings with great tenants, with great sponsors,
(42:40):
great locations that have put in the cap backs. Like
it's funny because I was talking to somebody at a
Midtown office and we're talking about different buildings and A
plus buildings, and they were like, is this.
Speaker 4 (42:55):
An A PLUS building?
Speaker 5 (42:56):
I'm like, you know, these buildings and you know Midtown
built in the nineteen seventies are no longer A plus
because what the new generation wants is what you can
go out and find in Hudson Yards, right, Like brand
new buildings, great sense of space, great views, and they
have amenities.
Speaker 3 (43:12):
Right.
Speaker 5 (43:12):
They have a gym, they have a restaurant, they have
you know, a coffee shop, they have a podcast room
for things like that. You know, like they have all
these things besides just offices. And that's what's bringing people back.
And the C suite is saying, look, we want people
to come back the office. Just having them come to
the office and you know, having no amenities, that's probably
(43:34):
not going to work. So we'll move into the latest
and greatest, you know, the shiny new toy buildings, and
we will you know, we'll bring people back, but they'll
be happy because we're in this incredible space. And now
we're saying that. I think the interesting thing is we're
seeing around Grand Central right Park Avenue. There was this
historian Bloomberg about you know, one seventy five Park and
(43:57):
three fifty Park and obviously JP Morgan's doing their headquarters,
so this kind of sleepy corridor. Obviously Park Avenue always
will have the cachet of the address. But now we're
seeing like some of the buildings there. It's not just
the Seagrum building, which has a great architect and like
this history behind it, but like these new buildings with
great amenities. They're going to be really tall, so great
(44:19):
views at least.
Speaker 4 (44:20):
At the top.
Speaker 5 (44:21):
They're going to get these two hundred dollars a square
foot rents, and they'll be able to bring people back
to the office because of that great stuff.
Speaker 1 (44:28):
John Kirshner ahead of you as securitized Products and portfolio
manager Janis Henderson, has been a pleasure having you on
the Credit Edge Money.
Speaker 5 (44:33):
Thanks yeah, thank you guys, great questions, great conversations. My
pleasure to be here, and.
Speaker 1 (44:38):
Of course very grateful to Spencer Cutter from Bloomberg Intelligence.
Thanks for joining us today. Spencer, thank you very much.
Speaker 3 (44:43):
Enjoyed it.
Speaker 1 (44:43):
For more credit analysis, read all of Spencer's great work
on the Bloomberg terminal. Bloomberg Intelligence is part of our
research department, with five hundred analysts and strategists working across
all markets. Coverage includes over two thousand equities and credits
and outlooks on more than ninety industries and one hundred
market indices, currencies and commodities. Please do subscribe to the
(45:05):
Credit Edge. Wherever you get your podcasts, We're on Apple, Spotify,
and all other good podcast providers, including the Bloomberg Terminal
at bpod Go. Give us a review, tell your friends,
or email me directly at jcrombieight at Bloomberg dot net.
I'm James Crombie. It's been a pleasure having you join
us again next week on the Credit Edge
Hello, Welcome to the Credit Edge, a weekly markets podcast.
My name is James Crumby. I'm a senior editor at Bloomberg.
Speaker 2 (00:23):
Hi, and I'm Spencer Cutter. I'm a senior credit analyst
covering the energy sector with Bloomberg Intelligence. This week, we're
very pleased to welcome John Kirshner, head of US securitized
Products and portfolio manager at Janis Henderson.
Speaker 3 (00:36):
John, how are you great?
Speaker 4 (00:38):
Thanks for having me pleasure to.
Speaker 2 (00:39):
Be here, great, thanks for joining us. For those of
you who are listening are not familiar with John, he's
a portfolio manager for a number of fixed income and
securitized ETFs at Janis Henderson, including the troll A Clo ETF,
which is the largest collateralized loan obligation ETF at.
Speaker 3 (00:54):
Over twenty billion in assets on our management.
Speaker 2 (00:56):
He also runs a Janis Henderson Mortgage Backed Securities ETF,
which is the largest actively managed mortgage backed securities et
at over five billion.
Speaker 1 (01:05):
Thank you, Spencer. Thank you for also spelling out collasteralized
loan obligations.
Speaker 4 (01:09):
No acronyms. I've been told.
Speaker 1 (01:12):
Keep it simple, so just to set the same before
we dig in. Global markets are getting whipswored by recession
fears and haphazard and erratic US policy making, particularly on trade.
Despite that credit spreads are quite tight across the board,
including structured finance, there's the hope that the longer term
trajectory of the US economy remains up despite some short
term pain and volatility. Market optimists believe the new administration
(01:34):
has their back and will do its best to defend
the economy, that everything will be okay in the end.
Bond and loan markets are pricing in very low odds
of a US recession, even as talk of economic downturn
even stagflation become more frequent, with consumers throwing in the
towel and business leaders putting investments on hold complaining that
they can't take long term decisions in this environment. Treasury
(01:55):
yields remain high, keeping buyers of fixed income happy, especially
those with floating rate assets. Above all, there's not enough
supply of corporate debt to satisfy the growing demand. But John,
what's your view, how does this all affect structured finance
markets and what's the drawer of things like clos in
these times of heightened volatility and stress?
Speaker 5 (02:13):
Yeah, Well, this is the big discussion flash argument of
the last month. Right, the new administration has added some
uncertainty to the overall economy and economic outlook. But I
think what people have to keep in mind is since
COVID we've been running massive deficits, right over ten percent
(02:36):
during COVID and even this past year about seven percent,
and that's not sustainable. So it's somewhat painful to dial
that down to a more normal level of three percent.
But this administration seems very motivated to do that. So
I think when people are out there saying, oh, well,
Biden's economy was so strong and now Trump or you know,
(02:58):
the White House is mucking them up, I think you
have to consider that. You know, what was going on
under the Biden administration was again not sustainable. But you know,
to your point, there have been a lot of people
now calling for a recession, and I think people have
to parse out like are people really rooting for a
(03:19):
recession because they don't like the current president or do
they really think it's going to be a recession. And
quite frankly, we just don't see the recession in the cards. Yes,
the soft data has gotten worse, like things like consumer
confidence and business confidence, but the hard data is still
pointing to a fairly strong economy. Now Q one GDP
(03:42):
will be lower than what we've seen. GDP has been
quite strong over the last couple of years, close to
three percent since twenty twenty two. This quarter is going
to be lower, probably about one percent, but that does
not mean a recession. And we're really looking at three things.
Number One is over all hard data, so like initial
(04:02):
jobless claims that really hasn't moved for years. And yes,
there might be a little blip in the DC area
that's to be expected with what's going on, but that
is has been traditionally the best indicator of recession going forward,
and we just haven't seen that move. Two, we're looking
at spreads in our sectors. So JP Morgan had a
(04:25):
very good piece this past week talking about when stocks
go down ten percent, what would you expect in securitized
products and investment grade and high yield credit as well.
And for example, stocks go down ten percent, you expect
mortgages be out twenty five basis points.
Speaker 4 (04:42):
They were out five basis points.
Speaker 5 (04:44):
You expect triple B autos out one hundred and twenty
five batises points. They've been out fifteen basis points and
high beta sectors like use cor credit or triple Bcnah,
it should be out two hundred and fifty to three
hundred basis points and they've only been out like fifty
five to seventy basis points. And then finally we actually
look at the prediction markets like polymarket and polymarket beginning
(05:07):
of the year was like twenty twenty five percent recession
probability for twenty twenty five. That's a baseline level. Today
it's about thirty two percent, so slightly higher, but nowhere
near the fifty to sixty percent that other people are
talking about.
Speaker 2 (05:21):
Quick question, sticking with the sort of high level economic
focus before digging into specific market trends. There's a reason
an article came out talking to a United States is
basically a consumer driven economy, right, And there was an
article that came out and study, I think there's Moodies
that ran it. Basically that the wealthiest ten percent of households,
which are households making more than two hundred and fifty
(05:43):
thousand dollars a year, is now driving fifty percent of
all consumer spending, which has grown pretty dramatically over the
last couple of years.
Speaker 3 (05:51):
And then that just means that the spending from the
other ninety percent of the household is somewhat anemic.
Speaker 2 (05:57):
Is that something that is on your radars in terms
of cause for concern for the overall economy or as
long as spending overall stays strong, and that's kind of
what matters.
Speaker 4 (06:09):
Yeah, like two points there.
Speaker 5 (06:11):
You hear the stat all the time that seventy percent
of the economy is driven by the consumer, and that
is true, but it also includes things like healthcare, right,
and no one is really spending discretionarily on healthcare. So
I just want to clear that up because I think
that's the most overuse statistic that I hear. But it
(06:32):
is true that consumer spending is very important to this economy,
and it is true that the wealthiest ten percent or
one third are however you want to split that demographic
is driving most of it. Now, I do not want
to minimize the pain that lower the lowering consumer is facing.
Speaker 4 (06:53):
Right.
Speaker 5 (06:54):
Inflation hurts the lower end consumer much much more than
the higher end consumer, just because they don't have as
much discretionary income. So things like food prices, obviously, egg prices,
gas prices, things like that that hurts, and so I
do not want to minimize that, but if you look
at the lowest one third of the economy, it's only
(07:15):
like fifteen percent of discretionary spending or consumer spending.
Speaker 4 (07:20):
And so yeah, when you're really.
Speaker 5 (07:22):
Thinking about what's going to move the overall economy, you
have to look at the you know, the top ten
or top third or however you want to divide it.
And those people are continuing to spend, their continuing to travel,
They're continuing to kind of run this economy, move this economy.
So that's really what's driving I think our outlook as
(07:45):
far as what's going to happen to gdb GDP growth
going forward.
Speaker 1 (07:49):
But that scenario kind of just no Fed rate cuts
this year, is that what you're expecting.
Speaker 5 (07:54):
So if there are going to be cuts, it's going
to be at the back end of the year, So,
you know, eight nine months, it's hard to say. I
think Chair Paul when he was had his press conference
last week pretty much said the same thing. Look, they
they can be patient. Right, Unemployment has moved up a
little bit from the lows, but still four point one percent,
(08:15):
still very low historically. And so if I'm Chair Paul,
he's done in a year. Basically, his legacy is that
he took inflation that was running depending on how you measure,
at seven to nine percent and brought it down to
you know, two and a half three percent. And now
with tariffs, maybe it notches up a little bit, but
(08:38):
he does not want to ruin that legacy. And if
there's no you know, the FED has a dual mandate, right,
stable prices and full employment, and we're kind of at
full employment and we're not quite at his target of
two percent inflation. So yeah, I think they will be patient,
and that speaks very well for you know, to kind
(09:00):
of move into the product pitch like floating rate securities
and clateralized loan obligation ETFs that we're obviously a big
fans of.
Speaker 2 (09:08):
You mentioned Powell and his impact on rates and whether
he'll cut rates or not, and what's happened We now
have another voice in the market, Treasury Secretary talking about
his desire to bring down yield on the tenure.
Speaker 3 (09:20):
Treasury specifically seems to be targeting that he.
Speaker 2 (09:23):
Doesn't have the levers to pull that Powell does. But
does that influence your decision or what would you see there?
Is that something that you would see impact in the
market or your decisions or outlook and where rates would go.
Speaker 5 (09:36):
Well, yeah, you ignore the Secretary of Treasury at your peril, right,
And people say, well, what can you really do? Like
he's not moving short term rates like the feed is,
but just him out there kind of talking about wanting
lower rates, I think is important and material. And look,
they can change the auction schedule and the size of
(09:58):
the auctions. They can move auctions more into the short
end of the curve. So there are some things they
can do on the margin, and I would expect the
market to take them at his word that they're focused
more on what's going on with the treasury market than
the equity market. So what this really if you have
the Treasury Secretary is saying we want the tenure treasury
(10:19):
lower because that affects a lot of borrowing, particularly mortgages
and commercial real estate. And you know, there really hasn't
been a lot of volatility in the tenures so far
this year, and you have the FED on hold. Basically
that argues for a flatter ye'll curve. And you know,
if you ask me what my projecting is a year forward,
(10:42):
I think maybe we do have one or two FED
cuts later on this year, maybe get to kind of
high three percent. But you know, the tenure Treasury right
now is looking pretty fair to us, so I think
the ye'll curve gets a little steeper, but not materially.
Speaker 2 (10:59):
So yeah, one sort of reaction I've heard people talk about,
you can move around the Treasury can move around the auctions,
whether they're going to do five year versus ten year,
twelve over twenty and potentially bring down the ten yere
I guess bring down the ten year rate relatively speaking
due to some sort of scarcity there because you're pushing
(11:19):
the auctions into other maturities. But then I guess I
question whether that would really have an impact on mortgage
rates if you end up with sort of an S
curve where the Treasury issues more five and seven year
notes and more fifteen year notes, but not any ten
year notes, so you kind of had a dip in there.
(11:40):
Are lenders really going to look past that dip and
focus just on a tenure. Theyre going to look more
at the curve and say, Okay, well this is kind
of artificial, and I'm going to look more at what's
the average curve between the seven and twelve or seven
fifteen year versus just the potentially artificially low ten years.
I mean, I don't know, that's my first reaction when
I hear that scenario.
Speaker 5 (12:00):
Yeah, it's an excellent question, and you get into the
nuances as like how do they actually set mortgage rates
and what's driving that? Right, And there's something called the
primary secondary spread between where actually mortage backed securities trade
and where mortgages are actually offered two borrowers out there.
But really what's driving it, yes, is the entire curve,
(12:25):
So you're right about that, But maybe more importantly is
volatility in the rates market. Right, like mortgages, we have
this kind of unique structure of our mortgage finance market,
which is a thirty year fixed rate, fully pre payable instrument.
Like no other country has this, and the only reason
(12:45):
we do have this is because of Fannie Mae and
Freddie mac Like. Banks don't really want to lend for
thirty years, particularly at a fixed rate, because on the
other side of their balance sheet or deposits, which you know,
based on Silicon Valley bank we know are not as
long to ration as a lot of people thought they were.
But banks can basically use Fanny and Freddie and get
(13:07):
mortgages off their balance sheet and sell them to investors
like Janis Henderson. So it's much more important that interest
rates are less volatile and stable. And what the Treasury
Secretary Scott Benson is doing is saying like we're going
to take out some of that volatility. And I don't
(13:28):
want to lead your listeners to believe like this is
a massive thing. It's definitely on the margin, but it
will help bring down those mortgage spreads over time because
the mortgage investors have to worry less about volatility, and
so that helps being able to project things like prepayments,
and that will cause mortgage spreads to be a little
(13:49):
bit tighter on the margin. So I have no doubt
if that happens that the Treasury Secretary in the White
House will take credit for it. But you know, it
affects a lot of people there. I mean, we've seen
overall supply of homes go up, and yet demand for
homes really hasn't gotten there because mortgage rates are still
(14:11):
kind of mid sixes. I think mortgage rates got down,
you know, for whatever reason, humans really love round numbers,
and if it gets down to a five handle you know,
upper five percent, You're going to see a lot of
buyers come in because it's just will be a regime change,
and that will even though housing's still doing pretty well.
We got some housing numbers this morning and home prices
(14:32):
have been up four percent. I think that will really
help affordability and continue to keep housing markets strong.
Speaker 1 (14:40):
Let's talk about the CLOS John though, you know you
run the biggest ETF. You know, it's a retail vehicle.
Four collateralized loan obligations which we bundled up loans to
companies leverage loans mostly so you know, on the risky side.
You know, when I first talked to people about the
concept of an ETF for clos, this is this is
(15:00):
going back, you know, more than a decade. They told
me I was crazy for reading suggesting it. Somehow you've
made a success of it.
Speaker 3 (15:06):
You know.
Speaker 1 (15:06):
The main sort of worry was that there was no
liquidity and then you know there was a mismatch there
for the retail participant and it was still going to
end in tears. Talk us through how this works, why
it matts is now and you know why it's not
really that risky.
Speaker 5 (15:21):
Yeah, well, you're not the only one that was told
that this is crazy. We got told that many times
from competitors and the press and even some of our investors.
But look, we are large investors in Colos before we
launched these products, and Jade Triple A was launched in
October of twenty twenty based on our experience through COVID
(15:44):
with Colos, So we have obviously many other portfolios. I
manage a multisector income portfolio, think of it as a
fixed income portfolio. That's best ideas. We held Triple A
Colos in that portfolio for liquidity purposes.
Speaker 4 (15:59):
When COVID hit, we had.
Speaker 5 (16:01):
To sell some Colos to raise some liquidity in the portfolio.
We sold three different batches end of February twenty twenty,
early March twenty twenty, and then on one of the
worst days during COVID, which was March twenty fourth of
twenty twenty, with you know, probably the worst day that
was a Tuesday. The worst day was Monday because that
(16:22):
Sunday there were actually a lot of hedge funds and
opportunity funds that got on wound. They tried to do
bid lists on a Sunday. I had never seen that
before in my thirty year plus career of trading bonds,
and so Monday come in really tough market, stocks downs,
bond spreads wider. So we didn't sell that day, but
we did sell on Tuesday, and we sold about fifty
(16:43):
million of triple A colos in eight different ln items.
We had many bids for each line item. We sold
the entire lot. There was probably two out of the
markets that you could have sold that much on that day,
and that's US treasuries and agency mortgages, IG corporate credit.
No high yield, definitely not Maybe if you had a
(17:04):
very short way to average life, like triple A credit
card or something, maybe, but it just showed to us
like the liquidities here, and why is that Because there's
never been a default in a triple A colo in
over thirty years, so it's not really a credit product.
And when they started trading mid nineties with a three
percent yield and a very short weighted average life, there
(17:26):
was all sorts, sorts of money, and you know funds
that had dry powder that said, wow, I can get
high single digits, maybe even double digits on a triple
A COLO. I don't know what's going to happen with COVID.
I don't know what's going to happen with equities, I
don't know what's going to happen to the economy, but
I'm very confident that these securities are actually going to
(17:49):
perform well. And if I can get those kind of returns,
I'm going to buy them and let the air clear,
let you know, figure out what's going on, and then
you know, I can sell them later. And so given
that experience and the fact that it's a one point
one trillion dollar market, a lot of people don't realize that,
by comparison, the high yield corporate bond market is only
about one point three to one point four trillion. It's
(18:11):
almost as big as the high yield corporate bond market
and growing while the high corporate bond market is shrinking.
Another two hundred and fifty billion of euro colos, some
of the best investment managers in the world are issuing colos.
There's over one hundred managers that issue every year. This
is a much bigger, much more liquid, much wider market
(18:34):
than people appreciate, and that's what gave us the confidence
that we could launch an ETF wrapper around it. And
nowadays we're we are seeing days where we'll have you know,
half a billion either trade on the buy side or
the cell side, and we won't even get a create
or redeem because of the underlying liquidity is so good.
Speaker 4 (18:58):
So it's it's.
Speaker 5 (19:00):
Worked out as we expected, but I think a lot
better than that a lot of people expected when we
launched J Triple A.
Speaker 1 (19:06):
Okay, we've been following the fun flows a little bit
over the last few days. You know that there have
been some slowdown because of growth fiars, I think Bank
of America flegg that essentially the higher rats STUF seems
to be getting some mainflow while the risky of funds
that the Triple B's losing some is that a flight
to safety and also your fund The J Triple A
saw a big outflow, you know, half a billion very recently.
(19:28):
What's that all about?
Speaker 5 (19:30):
Yeah, so two things. Let's address the first point. Yes,
J Triple B is probably down about that's our triple
B colo E TF got over two billion. It's down
a couple hundred million since then, down about you know,
ten twelve percent something like that. But we compare that
(19:50):
product to the leverage loan ETFs because that's what category
it's in. It's its main competitors. And if you look
at the big leverage loan ETFs, they're down in AU
on a BU twenty percent. So we're actually pretty happy
that we knew if there was a dislocation. Look, obviously
there are investors in there that are just you know,
riding the wave of risk on and as soon as
(20:12):
kind of things got a little shaky, they'd leave more
fast money. You know, it's not necessarily what we want
as far as investors, but you know, you take that
and realize that that is going to happen. And if
you had told me, like stocks are going to be
down ten percent, what's going to happen with J triple B?
I would have been perfectly happy with what we've seen.
(20:33):
And actually it's very interesting in Cololand. The mezzanine part
of the capital stack, so like let's just call triple
b's Single a's have held in better than the triple
A part of the capital stack. Obviously they've widened more,
but on a risk adjusted basis, they've held in better.
And that's really coming from the inflows that insurance companies
(20:55):
are getting. In insurance companies like investment grade, that mezzanine
part of the capital stack, and so they're continuing to
be buyers. And now as far as J triple A, look,
we still are plus five billion on the year, we're
up fourteen billion over one year. We're basically flat for
the month of March. We have learned that there were
(21:19):
some investors actually buying J triple A and putting some
leverage on it, which, you know, isn't that surprising because
when spreads are very very tight, a lot of these
you know, hedge funds are levered total return investors or
absolute return investors. That's what they'll do, right, because they
don't want to reach for yield by buying something that's
(21:41):
you know, the spreads are historically tight. They'd rather buy
something that's lower risk, put a couple turns of leverage
on it, figuring that if things do blow out, that
that actual that triple A type security with a little
leverage will actually perform better. So so that's just.
Speaker 4 (21:59):
A little leverage coming out of it.
Speaker 5 (22:00):
Again, like I said, we there were days where we
had some outflows but we didn't even see We saw
the trades as cells, but we didn't even see redeems.
And one other thing we should talk about is when
and investors sells. Basically, the the market maker can short
(22:22):
the shares to them or they can do a cash
redeem or an in kind redeem. So cash redem is
just as it sounds. We end up getting cash withdrawals
and then we have to sell colos to meet that.
But in kind means that we're just trading shares for clos.
So what a dealer will do they are you know,
(22:43):
our holdings are public. You can see them on Bloomberg
on a day by day basis. Dealer will go in
there and say we want these five clos and we
want to give you shares in returns. So that's an
in kind redeem. The nice thing about that because we
don't have to sell, there's really no bid ass there,
and it's it's more frictionless, right, and that keeps the
(23:07):
n a V of the ETF from getting too far
out of line with the underlying value or where the
portfolio is trading. So we've seen a lot more in
kind both creates and redeems, again just showing the liquidity
of these products. And again I think there's if you
(23:27):
look at you know, the price line or whatever, it's
not as volatile as a lot of people would think
because of this mechanism.
Speaker 1 (23:35):
Yeah, well, Spencer and Night with credit guys, we weary
all the time. But everything so when we see the
biggest outflow ever from the biggest Triple A clof should
we not panic?
Speaker 4 (23:45):
You should not panic.
Speaker 5 (23:47):
Literally, the triple A CLO market trades billions of dollars
a week. I'm not saying a you know, a half
a billion you know flow isn't big. But during the
UK l d I crisis, there was one line item
of a two hundred and seventy five million dollars COLO
that traded and the market didn't even blink.
Speaker 3 (24:07):
You know.
Speaker 5 (24:08):
It's like this market is so deep and there's such
a bid from end investors that even size which is
you know size open s eyes right, like even size
like that is is fairly easily digested by the market.
So we obviously get a lot of questions about this,
both internally and externally, and we have now we've had
(24:31):
several instances where we've gotten major inflows from you know,
end investors and now some outflows. And again, like the
market is functioning as advertised and it's really not pushing
around the price. And like I said, the the you know,
the richness or cheapness to nav you know, sometimes it
(24:53):
trades a little cheap or rich, but not like it's
like pennies or maybe you know, ten cents, fifteen cents.
It's not like points like we saw during COVID. So
I understand the concern or worry or or the you know, inspection,
but it is it is performing as advertised, and we
have many examples. If anybody wants to reach out to
(25:16):
Janis Henderson, our capital markets team is world class. We
can walk them through the actual numbers and put them
at ease.
Speaker 2 (25:23):
I'm going to reveal my age here and say that
my prior life before Bloomberg, I was working in the
leverage finance group at Lehman Brothers in the early two
thousands or underwriting leverage loans, a lot of which were
being syndicated to the then growing CLO market. The big
controversy or issue at the time was Covenant Light that
(25:44):
was starting to sort of make its way into the market.
I'm not going to ask you about that now because
it seems like that Ship of Salem that's pretty much
a standard.
Speaker 3 (25:53):
But something we.
Speaker 2 (25:53):
Didn't have to deal with as much back then was
private credit. It seems like, you know, every week there's
a new headline on some new fund putting billions of
dollars into private loans.
Speaker 3 (26:07):
Is that having an impact on the COLO market?
Speaker 2 (26:09):
Does that take away the supply that you could otherwise
have and put into a clo. What's the outlook or
the impact from the private credit market and growth of
that side versus the COLO market?
Speaker 3 (26:22):
What does that do to your product?
Speaker 5 (26:24):
Yeah, so it's a very good question. I want to
be very clear that private credit has got an incredible
amount of attention and press over the last couple of years,
just because it used to be kind of this sideshow
of a sideshow, like colos were a little bit of
a sideshow and private credit colos were a sideshow. But
private credit is definitely here to stay, right, It's depending
(26:46):
on who you ask, somewhere around seven hundred and fifty
billion to a trillion dollar asset class. It's growing, It
is taking some share away from the public markets. It's
why one of the reasons, like I mentioned before, how
you'll corporate credit is shrinking. But last year we actually
saw some deals that or firms that had gone the
(27:08):
private route come back to the public route. So there's
pluses and minuses on both sides. Our view is when
you look at private cress, so there's private credit loans,
and then now we have private credit clos and now
we even have some private credit COLO ETF. So you
(27:28):
know the three or the three derivatives of that market,
and so private credit definitely here to stay. There's some
very good managers here that do that, that know what
they're doing, no worries or complaints. Besides that, investors, if
they're investing in that market, they have to understand it
(27:48):
comes with the lack of transparency and a lack of liquidity, right,
and there.
Speaker 4 (27:53):
Are reasons for that.
Speaker 5 (27:55):
I'm not saying that's necessarily bad, because it also comes
with wider spreads, more covenants. Your local private credit manager
will be able to sing the praises of that market,
but I think investors have to be aware of that.
Private credit colos were very, very small till twenty twenty four,
when I think they issued about forty billion, whereas the
(28:17):
what we call the BSL broadly syndicated loan COLO market
was about one hundred little over one hundred, maybe one
hundred twenty hundred and thirty billion, So it used to
be about five to ten percent of the BSL market,
and all of a sudden it was about twenty five,
maybe even thirty percent of the BSL market. So Wall
Street was talking about a lot and how this was
(28:40):
going to grow, and it will grow, but private credit
colos are still a much smaller, less liquid market. Like
I mentioned, in any given week, the broadly syndicated loan
COLO market will trade billions, and the private credits market
(29:00):
will trade two to five percent of that. It's really
like tens to twenty millions. So the liquidity isn't even close.
It's just a fraction. And so when these issuers came
out and obviously we're not doing this, but came out
with private credit colo ETFs, you know, I think this
(29:21):
skepticism there should be real because the underlying isn't nearly
as liquid and hasn't really been tested throughout a real
dislocation credit cycle, et cetera, et cetera. And one of
the problems with private credit as well. And again like
if you go out and talk to these managers, I'm
(29:43):
not trying to, you know, say that they're not doing
the right thing or they're not doing the appropriate thing,
but bank of America had a recent piece where they
showed one loan in particular and six different managers, and
as this loan went through it it's you know problem
cycle default cycle. Different managers had it marked very differently,
(30:06):
like one manager had it marked in the mid to
high nineties, one manager had it marked at seventy. Now again,
I'm sure if you go talk to those managers they
will have very cojent arguments about where they were marking it.
But it doesn't have the transparency that you see in
the broadly syndicated loan market, which means any kind of
derivative security, whether it's a COLO or COLO ETF is
(30:30):
not going to have the same liquidity. So that's what's
going on with private credit. We have decided not to
go into that market for the reasons I just talked about.
What we're most concerned with that Janis Henderson, is our
client experience and our client promise. Right, the only unhappy
client should be one where we break our client promise
(30:51):
or we don't explain it properly. And so what we
have said with Triple A's Colos j Triple A, Jerry
Triple B that the liquidity's actually there even in dislocated markets,
and so far that it's proven to be true.
Speaker 2 (31:04):
I get as a quick follow up, as the private
credit market grows and becomes more mature and tested, is
it possible that that you guys would go into that
or even that the two markets kind of merge from
the clo standpoint and that now you have clos that
have both broadly syndicated loans and private loans in them
(31:25):
and you're not really bifurcating between the two. Or is
that just a bridge too far.
Speaker 5 (31:29):
Yeah, I think the latter is a possibility, but it
also there's there's also always a danger to taking these
products and making them too complicated, right invest Most of
our investors that are you know, either you know, retail
s like financial advisors or even the bigger kind of
(31:52):
asset allocators, they love the fact that they know what
they're getting with J triple A and J triple B.
There it's a very simple. Yes, we have levers to
add alpha, but we're you know, we're in triple A
clos at least ninety percent for J triple A. We
can go down to single A for ten percent vote,
but that is not a given right now. I think
(32:13):
we're below triple A, we're less than one percent. J
triple B can go below triple B for fifteen percent,
but right now we're all triple B. So we keep
it very plain, vanilla and simple for a reason because
I think whenever you add that layer of complexity, you
always have to ask ask as an investor, well what
am I missing? Why am I why are they doing this?
(32:35):
You know, if I want private credit, I should be
able to get that in its own wrapper. Like when
you start getting this mixture, it's kind of like I
don't really know what I'm getting, and that's going to
scare off a lot of investors. Never say never. As
far as Janis Henderson doing a private credit COLO ETF,
(32:57):
we have no plans on doing it. We're more focused
on the global market. Currently. We have a European clo
ETF and and you know, there are certain investors that
either can't or won't buy the US clo ets because
withholding taxes, and we are working on products to kind
(33:18):
of satisfy those investors. So that's really taking what we're
doing in the US with J triple A and J
triple B and taking that to.
Speaker 4 (33:26):
A more global audience. Is really where we're focused now.
Speaker 1 (33:30):
Before we get to even the private credit clo ETF,
we have to do the private credit ETF. Does that
make sense as a concept.
Speaker 4 (33:35):
Do you think I?
Speaker 5 (33:36):
I'm somewhat skeptical of it for the reasons I just
mentioned again. You know, I don't want to be here
like I'm my high horse saying that private credit is bad.
I just worry about the liquidity in an ETF rapper
and how that's going to work. I really think if
you want private credit credit doing in a BBC business
(33:56):
development company, you know, like a different wrapper where the
investor really knows, you know, how they get in, how
they get out, fees they're paying, things like that, I
really think that is a better vehicle for that type
of product.
Speaker 1 (34:11):
Okay, on this show, for many months now, we've been
talking about the potential for mispriced risk across the board.
Given the huge what seems to be a demand supply
in balance that's obviously happening in the loan market. There
isn't a lot of net supply, and there seems to
be not much prospect of M and A coming to
(34:31):
provide new net supply, so it gets tighter and tighter
the demands ramping up. People want these assets, they want
the yield. But you know, so what do you do
in that situation? I mean, is it do you just
buy anything because you have to, or do you have
to substitute in other things like high eeld bonds or
what's the solution to all this?
Speaker 4 (34:48):
Well?
Speaker 5 (34:48):
Right, and that has been the big issue over the
last couple of years. As you know, we came out
of COVID and spread Scott tighter and tighter, and a
lot of that is technicals. Right when you go back
and think about when's the last time when spreads were
just really attractive. That was kind of twenty I mean,
obviously COVID, but then we came out of COVID, But
it was really once we kind of had some idea
(35:10):
of what was going to happen with COVID and it
was going to eventually decrease and go away. It was
really twenty twenty two, right, and two things were happening. Obviously,
fed raising rates, bond markets sold off. Money managers normally
get about one hundred billion a quarter in inflows. They
were getting just the opposite in twenty twenty two. So
(35:32):
instead of net inflows, they were getting net outflows. That
meant there was for sellings. Because of that, the technicals
were pretty horrible. Money managers had to sell, you know,
you got to meet redemptions. And then at the same time,
there were calls for a recession, right, and we never
really necessarily believe those calls for a recession, but pretty
(35:54):
much everybody out there was saying, you know, fifty percent,
sixty percent chance of recession. And why is that? Because
usually recoveries and for one of two reasons, it's either
too much leverage in the system. Think about the dot
com burst or think about the GFC.
Speaker 3 (36:13):
Right.
Speaker 5 (36:13):
These are typical recessions where you just have a risk
on market and then people put leverage on that, and
then you have leverage on leverage and eventually that has
to end and kind of removing that leverage on winding
that leverage causes the recession or some exogenous shock like COVID.
Speaker 4 (36:32):
Right.
Speaker 5 (36:34):
But in the past, we've also seen the FED raise
rates and continue to raise rates and just keep them
too high for too long until it's too late. Because
we know that FED policy acts.
Speaker 4 (36:49):
On long and variable legs.
Speaker 5 (36:50):
Right, That's the phrase they always use. No one really
knows what that means or how long is long and
how variable is variable?
Speaker 4 (36:58):
But we know that.
Speaker 5 (36:59):
It's not, you know, a precise instrument, even though the
FED makes it seem like that with twenty five basis
points hikes or.
Speaker 4 (37:10):
Reductions.
Speaker 5 (37:10):
So so usually the FED just hikes too much, keeps
it too long, and then the economy starts slowing and
by the time they start cutting rates, the economy slows
down goes in a recession. And so that's what a
lot of people thought was going to happen, and it
turned out not to be the case.
Speaker 4 (37:26):
So yeah, I just.
Speaker 5 (37:29):
Think that overall that when you look at this market,
people were getting inflows they had to buy. And I
think the interesting thing is, you know, if you're a
high yield manager, right and highyield spreads are tight and
you're getting inflows, you still have to buy high yield,
right and there you know by you know the dictum
(37:52):
of your overall portfolio, and fun that's what you have
to do. The nice thing about what we do in
securitized products. Yes, we have Colo products that are like
I said, simple, and so we have to buy colos
in those, but we have Janis Henderson Securitized Incdom that
can buy kind of across securitized products. I run a
(38:13):
multi sector income fund. Like I said, it's kind of
the best ideas and the nice thing about securitized product
there's still some very interesting, relatively cheap sectors within there,
particularly within the commercial real estate sector, but also within
ABS and even non agency rbs like home equity type securities.
(38:34):
It's a relatively new market. They have been trading relatively
cheap to a lot of other products out there. And
so in these instances where you know, kind of the
headline products maybe if you look at like prime auto
ABS or you know, HYO corporate credit or IG corporate credit,
you have to have the you know, ability to price
(38:57):
risk in other markets and to go into those other
markets to find relative value.
Speaker 1 (39:02):
You mentioned relative value, John, which caught my ear because
everyone's been telling us everything so expensive for so long.
So the old idea that something might be cheap will
come as a surprise to some of our previous guests.
But where is the best relative value right now? And
you know, what's what's the opportunity view?
Speaker 5 (39:16):
I mean, I think with it if you look at
there's a couple of the different things, like if you
really think tariffs are going to bite that the Fed is,
you know, going to be on hold for longer, higher
for longer, and you know that that is not a
bad view. I would agree with that view in certain respects.
Then you know, we still like colos because if you
(39:37):
look at you know, triple A colos got as tight
as one ten one point fifteen, they wind out about
fifteen basis points, maybe twenty basis points depending.
Speaker 4 (39:49):
On the manager. That's still pretty.
Speaker 5 (39:51):
Good relative value, particularly when you look at investment grade
corporate credit and it's it's it's a hedge against high rates.
Right like when you look back at twenty twenty two,
like so many investors had such a bad experience because
for the twenty years before that, they used to negative
correlation between stocks and bonds. Right when stocks went up, bonds,
(40:14):
you know, rates went up, so bond prices went down
and vice versa. Like during COVID, stocks went down, but
yields went down, so bond prices at least for like
mortgages and treasuries went up. All said, in twenty twenty two,
because inflation was high, that negative correlation turned into positive correlations.
So stocks went down, rates went up as the FED
(40:34):
was raising rates and bond prices went down as well.
A lot of investors, you know, came to us and said,
thank goodness for J triple A was the one thing
in my portfolio that was actually positive.
Speaker 4 (40:46):
On the year.
Speaker 5 (40:46):
So if you have a concern that again the terarifts
are going to bite, that maybe maybe the Fed doesn't
cut rates, maybe they actually have to hike rates. Not
our baseline call, but possibility. At absolutely J triple A
still you're getting kind of mid five type yields triple
A credit quality floating rate. It's a good hedge to
(41:09):
any portfolio because the vast majority of fixed income in
the US is fixed, and it offsets that as very
low correlation. If you want to take a little more risk,
get a little more yield J triple B. But we
want to make sure investors realize that the volatility in
J triple B is probably four x J triple a.
It's not quite equity volatility, but it's definitely higher volatility.
(41:34):
So the second part, we still like agency mortgages. They
never got as tight as a lot of sectors. Some
of that is due with technicals, some of it has
to do with volatility and interest rates. Some of that
has to do with bank regulations and what we saw
even two years back with Silicon Valley Bank.
Speaker 4 (41:53):
But still, you know.
Speaker 5 (41:55):
Fanny and Freddie Awards of the State for all intents
and purposes, government gearing, you're still getting, you know, on
a vall, if you take out volatility vowel adjusted bases,
you're still getting one hundred and thirty one hundred and
thirty five bas points over treasuries. We think that looks good.
And then finally CNBS. This has been an unloved sector. Obviously,
(42:18):
the office sector has gone through all sorts of pain.
But what we see is because of that, there's there's
actually a lot of opportunity in this sector because they're
investors that just have stepped away from this market, and
you're seeing great buildings with great tenants, with great sponsors,
(42:40):
great locations that have put in the cap backs. Like
it's funny because I was talking to somebody at a
Midtown office and we're talking about different buildings and A
plus buildings, and they were like, is this.
Speaker 4 (42:55):
An A PLUS building?
Speaker 5 (42:56):
I'm like, you know, these buildings and you know Midtown
built in the nineteen seventies are no longer A plus
because what the new generation wants is what you can
go out and find in Hudson Yards, right, Like brand
new buildings, great sense of space, great views, and they
have amenities.
Speaker 3 (43:12):
Right.
Speaker 5 (43:12):
They have a gym, they have a restaurant, they have
you know, a coffee shop, they have a podcast room
for things like that. You know, like they have all
these things besides just offices. And that's what's bringing people back.
And the C suite is saying, look, we want people
to come back the office. Just having them come to
the office and you know, having no amenities, that's probably
(43:34):
not going to work. So we'll move into the latest
and greatest, you know, the shiny new toy buildings, and
we will you know, we'll bring people back, but they'll
be happy because we're in this incredible space. And now
we're saying that. I think the interesting thing is we're
seeing around Grand Central right Park Avenue. There was this
historian Bloomberg about you know, one seventy five Park and
(43:57):
three fifty Park and obviously JP Morgan's doing their headquarters,
so this kind of sleepy corridor. Obviously Park Avenue always
will have the cachet of the address. But now we're
seeing like some of the buildings there. It's not just
the Seagrum building, which has a great architect and like
this history behind it, but like these new buildings with
great amenities. They're going to be really tall, so great
(44:19):
views at least.
Speaker 4 (44:20):
At the top.
Speaker 5 (44:21):
They're going to get these two hundred dollars a square
foot rents, and they'll be able to bring people back
to the office because of that great stuff.
Speaker 1 (44:28):
John Kirshner ahead of you as securitized Products and portfolio
manager Janis Henderson, has been a pleasure having you on
the Credit Edge Money.
Speaker 5 (44:33):
Thanks yeah, thank you guys, great questions, great conversations. My
pleasure to be here, and.
Speaker 1 (44:38):
Of course very grateful to Spencer Cutter from Bloomberg Intelligence.
Thanks for joining us today. Spencer, thank you very much.
Speaker 3 (44:43):
Enjoyed it.
Speaker 1 (44:43):
For more credit analysis, read all of Spencer's great work
on the Bloomberg terminal. Bloomberg Intelligence is part of our
research department, with five hundred analysts and strategists working across
all markets. Coverage includes over two thousand equities and credits
and outlooks on more than ninety industries and one hundred
market indices, currencies and commodities. Please do subscribe to the
(45:05):
Credit Edge. Wherever you get your podcasts, We're on Apple, Spotify,
and all other good podcast providers, including the Bloomberg Terminal
at bpod Go. Give us a review, tell your friends,
or email me directly at jcrombieight at Bloomberg dot net.
I'm James Crombie. It's been a pleasure having you join
us again next week on the Credit Edge
Host
James Crombie
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