Corporate Credit Snapshot - November 2025

November 11, 2025

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US

US credit markets generated positive excess returns across the board in October. The month was anything but straightforward for investors as spreads in most markets made a round trip. Various headlines early in the month pushed spreads wider, including President Trump threatening 100% tariffs on Chinese goods and casting doubts over his meeting with President Xi. The market also reacted to news of two high-profile US bankruptcies, Jamie Dimon’s ‘cockroach’ comments about a perceived deterioration in lending standards, new US-Russian sanctions, and losses at US regional banks that triggered some concerns of systemic risk. However, spreads rallied at the end of the month on positive trade developments between the US and China, a Federal Reserve (Fed) rate cut, and the widespread view that the month’s credit events seemed idiosyncratic. The Fed’s cut was considered hawkish by the market, with Jerome Powell stating that a December cut was not a foregone conclusion. Rates started October in a broadly risk-off environment but moved higher after the central bank meeting. We finished the month with 10-year rates slightly lower in both the US and Europe.

EUROPE

European credit markets generated positive excess returns across the board in October. As alluded to in the US commentary, the month was anything but straightforward for investors as spreads in most markets made a round trip.  The European Central Bank stayed on hold and confirmed its data-dependent approach going forward.

EM

Emerging markets (EM) debt delivered strong positive excess returns this month. As alluded to in the US commentary, the month was anything but straightforward for investors as spreads in most markets made a round trip.  Japan appointed a new Prime Minister, Sanae Takaichi, who is expected to pursue an Abenomics-style agenda centered on monetary easing, fiscal stimulus and structural reform. In Argentina, President Javier Milei’s libertarian party scored a major victory in the midterm legislative elections, providing renewed momentum for his free-market reform program. We believe the macro backdrop of easing global financial conditions, coupled with a string of positive geopolitical developments, has put EM back in favor with investors and prompted some investor efforts to ameliorate EM portfolio underweights.

OUTLOOK

There are plenty of headlines recently concerning tight spreads and deteriorating credit quality fueled by a lack of underwriting standards. We do not observe a broad-based deterioration of underwriting standards. While spreads remain at historically tight levels, we see this as justified; companies are mostly reporting strong earnings with solid interest coverage. We remain committed to our time-tested credit assessment methodology to ascertain company credit worthiness. We do not see systemic credit risk, rather we see a few highly publicized defaults caused by idiosyncratic risk. In a market that is preoccupied by a potential bubble bursting, we believe that at current yields credit still offers good protection against potential downside volatility. 

 

Past performance is not a reliable indicator of current or future performance. 

Muzinich views and opinions are for illustrative purposes only and not to be construed as investment advice.

This material is not intended to be relied upon as a forecast, research, or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed by Muzinich & Co. are as of November 2025 and may change without notice.

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