Executive Summary
Morgan Stanley's credit chief Andrew Sheets delivers a counterintuitive thesis: the credit cycle will 'burn hotter before it burns out' in 2026, despite spreads sitting at 25-year tights. The firm forecasts US investment grade net issuance to surge 60% to $1 trillion, driven by AI infrastructure spending and increased M&A activity. This massive supply wave should force US spreads wider even in a healthy economy, creating a regional arbitrage opportunity. European and Asian credit markets, facing...
Key Investment Opportunity
Regional Credit Arbitrage: European and Asian IG Outperformance
Morgan Stanley's forecast of $1 trillion US IG issuance creates a supply-demand imbalance that should force US spreads wider relative to other regions. European and Asian investment grade markets face significantly lower relative issuance pressure, positioning them to outperform US credit despite si...
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