Ryan Domsy of Foyston, Gordon & Payne notes spreads are widening for the first time in years, especially in US leveraged loans and private credit, while Canadian investment-grade credit remains resilient.
The widening reflects investor caution and a demand for higher compensation, not imminent default risk, with active managers better positioned to capitalize on selective opportunities as market differentiation returns.
Ongoing geopolitical disruptions may cause further supply chain strain, inflation, and stress for smaller borrowers, making careful risk management and due diligence crucial for investors navigating this defensive market phase.
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