Global Credit: Energy Shocks, AI Borrowing, and Signs of Stress | EP 214

In this episode, Brian Carney, lead portfolio manager of the Mawer Global Credit Opportunities Strategy, examines a fixed income backdrop reshaped by geopolitical escalation, an energy shock, and sharply changing interest-rate expectations. He explains why higher benchmark yields and modestly wider spreads still leave many parts of credit looking expensive, where Mawer is finding more selective value through bottom-up research, and why the strategy remains tilted toward shorter-duration, higher-quality credit. The conversation also explores AI-related bond issuance from hyperscalers, signs of strain in leveraged finance and private credit, and what a more fragile lending environment could mean for investors.

Highlights:

• How geopolitical escalation and higher oil prices have pushed inflation concerns back to the forefront and reshaped rate expectations in major markets.
• Why higher benchmark yields have not been enough to make much of longer-duration or lower-quality credit compelling today.
• A look at two selective opportunities: CoreWeave, tied to AI infrastructure, and a fallen angel with potential catalysts and downside protection.
• How AI is being used inside Mawer's research process to sort through a vast global credit universe and surface new ideas.
• Why massive borrowing by hyperscalers to fund AI CapEx could pressure investment-grade spreads over the next 12 to 18 months.
• Early signs of stress in leveraged loans and private credit, and why Brian sees growing evidence of "decay" in parts of the lending market.

Chapters:
[0:00] Introduction
[0:32] Disclaimer
[0:49] Welcome and Guest Introduction
[0:54] Macro Environment Shifts: Geopolitical Tensions and Energy Shocks
[1:44] Impact on Global Credit Markets and Central Bank Expectations
[4:32] Where to Find Value in Credit Markets Today
[6:47] Portfolio Positioning: Defensive Stance Explained
[7:18] Credit Opportunity #1: CoreWeave and the AI Revolution
[8:35] Credit Opportunity #2: A Fallen Angel Opportunity
[9:49] Using AI Technology in Credit Research
[10:59] Hyperscaler Bond Issuance: The New Market Dynamic
[13:47] Impact of Tech Giants Crowding the Investment Grade Market
[14:56] Private Credit Risks and Bank Syndication Challenges
[16:53] Signs of Decay in Private Credit Markets
[20:42] Closing Thoughts: Positioning for Opportunity
[21:16] Outro

Host:
Kevin Minas, CFA
Institutional Portfolio Manager

Guest:
Brian Carney, CFA
Portfolio Manager

This episode is available for download anywhere you get your podcasts.

Founded in 1974, Mawer Investment Management Ltd. (pronounced "more") is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore.

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