00:00Brian Whelan of TCW was telling us last week that the cost of capital doesn't matter to these hyperscalers, Victor,
00:05that for them it's not about the interest rate, it's about getting the capital.
00:10There are borrowers who are basically insensitive to price.
00:13Other corporate borrowers are not in the same boat.
00:15They're not so fortunate.
00:17So who ends up getting perhaps squeezed out?
00:19If the ripple effects that Oksana was talking about continue, who ends up feeling it?
00:26Well, the dynamic in the primary market right now is one that looks very similar to the rest of the
00:33economy.
00:34You know, if you look at the U.S. economy, people are fond of calling it sort of a K
00:39-shaped economy.
00:40And you have pockets that are growing very fast.
00:42And then you have other parts of it that aren't growing very fast at all.
00:47The same thing is true in the credit market.
00:48You obviously have the hyperscalers and, you know, associated parts of tech.
00:53That are growing very fast, borrowing very much, and who are sort of, you know, occupying a very high share
01:02of the primary market.
01:04But, you know, if you look at more cyclical parts of the economy, for now, the sort of lower end
01:10of that K, if you like,
01:12here issuance isn't strong at all.
01:15You know, if you look at transport, if you look at industry, industrials, year to date, they're well below their
01:22historical issuance pace.
01:25So the thing is, right now, there is an equilibrium, which I think kind of works and I think helps
01:32explain why all of this capex and supply so far isn't pushing aggregate investment grade spreads much wider because of
01:42the K-shaped nature of issuance in general.
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