00:00I think this is a really exciting time in the corporate credit markets for a few reasons,
00:03but one is kind of the massive scale and scope of this AI-related spending plan
00:09is going to require a range of markets to participate.
00:13So you had mentioned that corporates are diversifying their funding outside of the USIG market.
00:18This is really driven by market saturation and issuer concentration constraints in the USIG market.
00:24It's obviously a very deep, liquid, broad market,
00:27but corporates need to be thoughtful about how much debt they can issue into any one market.
00:32So we are seeing corporates tap euro, Swiss, sterling, even Canadian dollar and Japanese yen.
00:37I would say of those markets, the European IG market is the largest and the deepest
00:42of those other regional corporate bond universes.
00:45But this is a trend that we think will continue.
00:47We're in the early innings.
00:48One crazy statistic that we've monitored is that if you actually take the European AA corporate market,
00:5453% of that index is driven by US-based companies.
00:58And actually, two of the hyperscalers are among the top five issuers already.
01:02So this is really accelerating.
01:05On top of that, we also see roles for other structures to participate
01:09and even other markets like private infrastructure and real estate.
01:12And so it's hard to kind of understate the paradigm shift that is happening in corporate credit markets
01:17as a result of coalescing around this funding need.
01:19Yeah, it's really interesting.
01:21And to your point, we've seen the likes of Alphabet tapping the markets, the euro markets.
01:24And today, Amazon in Swissies as well, Swiss price debt as well.
01:28Amazon looking to access the markets there.
01:31But for you, this is a healthy dynamic.
01:34Does it suggest that the US markets, there's a bit of indigestion in terms of the amount of debt that's
01:38being absorbed?
01:38It's not indigestion.
01:40It's actually, it's very predictable.
01:42Actually, if you take the US banks, which are a great case study,
01:44the US banks are the largest sector in the US IG market, but none of those banks have more than
01:50$175 billion of debt
01:51or represent more than 2.3% of the index.
01:55That's really just asset managers won't want to overweight their portfolios in any one given name.
02:00So it's a normal kind of progression.
02:02I would say two things.
02:03There's a lot of runway for this sector to issue because keep in mind,
02:06they're starting from a point of very low leverage.
02:09Many of these hyperscalers are cash rich.
02:11So their balance sheet leverage allows them to add debt capacity.
02:14I think as we progress, however, and this is the second point, through 2027, 2028,
02:19investors will just need to plan more thoughtfully where they want to take this exposure.
02:23Do they want it in high yield?
02:24Do they want it in IG?
02:26Do they want it in the private infrastructure market?
02:28If they're thinking about IG corporate debt, do they want it in US or in euro or in other markets?
02:33And so I think there is a bit more thoughtfulness that investors are navigating this decision tree.
02:38And I think for now, there's for sure a lot more scope,
02:41but that will probably become more pertinent in 2077 and 2028.
02:45Okay.
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