Saturday, September 5th, 2026
The Numbers
Moody's puts expected ultimate recoveries on first-lien middle-market loans at about 68 cents, against a long-run average in the high seventies. Between 90 and 95 percent of broadly syndicated issuance now carries no financial maintenance covenant. Those two facts are the same fact.
One account of second-quarter results says conditions have begun to stabilise. Another, from a review of filings by 44 business development companies, says portfolios moved further below cost. Ares Capital's non-accruals rose 15 percent to $708m. The reports do not contradict each other; they describe different derivatives of the same line.
The ten-year Treasury reached its highest yield since November 2023 on Wednesday. On the same day Japanese ten-year debt passed 3 percent for the first time in thirty years, German yields hit a fourteen-year high and British yields an eighteen-year one. Four governments with four different problems do not usually move together.
The chair of the Financial Stability Board has written to the G20 about artificial intelligence. Half the letter describes a familiar credit event wearing new clothes. The other half describes something the system has not priced at all.
Around forty lenders funded one Sydney developer, and each carried its own view of what the loans were worth. An insolvency does not create the loss. It supplies the first price anyone is obliged to accept.
Capital markets have become the reinsurer of last resort for storm and quake risk, and the spread on a cat bond is now a cleaner read on climate exposure than anything in an insurer's filings.
Closed-end funds routinely trade below net asset value and mostly stay there. The persistence is the interesting part, because arbitrage cannot close a gap with no mechanism to force it.
Credit ratings lag the market by design, which would be harmless if so many mandates were not written to act on them. The lag is priced in; the forced selling is not.
An addition to a major index obliges a large and predictable set of buyers to act on a known date. That predictability is the whole opportunity, and the whole problem.
Shareholder meetings were a scheduling exercise for decades. Rising opposition on pay, board composition and auditor tenure has made the outcome uncertain enough to require actual campaigning.
Corporate bond ETFs now supply much of the liquidity that dealer balance sheets used to. The mechanism works well and has been tested mainly in conditions that were not the hard case.
Vehicles offering private-market exposure with periodic liquidity have gathered enormous sums from investors who have never needed to leave. The gate is the product, and most holders have not read it.
Private funds promised distributions on a timetable that stopped being met. The secondary market has grown from a distressed corner into the mechanism by which investors get money back at all.
