2021 크레딧 전망

GLOBAL CREDIT OUTLOOK 2021

Selectivity and the search for yield will drive the narrative, in our view. Our themes: Rebuilding portfolios for income, sustainability, and opportunities in Asian credit.

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An uneven recovery

We begin a new year optimistic about growth, constructive on the economic recovery underway, yet vigilant to how that recovery is experienced across regions and sectors. Credit markets are seeing greater demand globally in a low yield world, and investors are re-thinking portfolio design to incorporate higher allocations to both public and private credit.

As we think about what will drive credit markets in the year ahead, we are optimistic about the vaccine development and deployment, the economic recovery already underway, and the impact this will have on businesses globally.

We see three key themes critical to investing in 2021. The first theme is (Re)building portfolios for income. Fixed income yields are near historic lows, and there is now USD $18 trillion of negative yielding debt outstanding. With traditional fixed income no longer providing enough income, we believe investors should re-think asset allocation to incorporate a greater strategic allocation to credit.

The second theme is Sustainability to the fore. Although environmental, social and governance issues have long been important for credit investors, this may be the year that integration of sustainable investment practices becomes a truly global mandate. The events of 2020 reinforced the importance of integrating ESG into credit selection.

And finally, the third theme this year is exploring Opportunities in Asian credit. As investors look beyond developed credit markets for income and diversification, we think it makes sense to explore opportunities in Asian credit broadly and China specifically.

Please look at the full outlook for more insight into our views on credit investment opportunities this year.

Global credit in 2021

Listen to an overview of our three themes for the year ahead in public and private credit, presented by John Griffith, Senior Product Strategist on our global credit team.

Our themes

01

(Re)building portfolios for income

Fixed income yields are near historic lows, with the Bloomberg Barclays Global Aggregate Index now yielding 0.85% and over $18 trillion in negative yielding debt outstanding as of December 31, 2020. With traditional fixed income markets no longer providing sufficient income, investors are actively re-evaluating portfolio design.

02

Sustainability to the fore

ESG issues have long been important for credit investors. This may be the year that integration of sustainable investment practices becomes a truly global mandate, with credit investors focusing on the potential risks that ESG factors could play in the long-term sustainability of a borrower’s business model.

03

Opportunities in Asian credit

As investors look beyond developed credit markets for income and diversification, we believe the opportunities in Asian credit broadly and China specifically should be explored. However, China is not the sole reason for our constructive view on Asian credit. We see potential opportunities in India, Indonesia and Southeast Asia as well.

Lessons of 2020

Full year results across global credit markets last year masked the most significant and highly correlated selloff in recent history, followed by an impressive rebound from the March lows. The large scale and coordinated global monetary and fiscal policy actions materially changed the trajectory of credit performance last year.

Starting point for global credit carry this year

Yields by market

Source: BlackRock, [11/30/20]. Asia HY = JP Morgan JACI High Yield Index, Asia IG = JP Morgan JACI Investment Grade Index, US Loans = S&P Leveraged Loan Index, US HY = Barclays US High Yield Index, EM Corp = JP Morgan CEMBI Index, EM Sov = JP Morgan EMBI Index, EU HY = Barclays Pan European High Yield Index, US IG = Barclays US Investment Grade Corporate Index, EU IG = Barclays European Investment Grade Corporate Index.

Selectivity will be key

Credit is supported by expectations for continued accommodative policies, vaccine development and deployment, an improving consumer and corporate sector, and a multi-year earnings recovery. However, spreads are near historic lows, and some deteriorating terms and transaction quality reinforce our increased focus on credit selection.

Fundamental credit investing has a long history of incorporating ESG considerations when making investment decisions. Greater awareness of these risk factors improves transparency and increases accountability among issuers and investors.

James Keenan CIO & Co-Head of Global Credit

What we expect

We expect credit markets generally to deliver mid-single digit returns this year driven primarily by coupon income (carry) with spread tightening offset by modestly steeper yield curves. We believe accommodative global policy support and vaccine development and distribution will fuel pent up demand which should support an earnings recovery and lead to new investment and a multi-year expansion. Despite our overall constructive tone, investors should anticipate a wider range of outcomes across regions and sectors and focus on credit selection to create differentiated outcomes.

Credit markets are seeing greater demand in a low yield world. Find out what investors can expect as they consider the effects of monetary and fiscal policy support, pandemic-driven dispersion in sector performance and a multi-speed global recovery

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