Aronovliquidity.” Ideally, you want to start getting involved when sentiment
is at its worst, when sentiment has priced in the absolute worst-
case scenario.
JC: Will Federal Reserve purchases of corporate debt provide
support?
OA: It probably helps at least symbolically and psychologically.
I do not believe that it will actually prevent the cascade of down-
grades we’re going to see in the triple-B part of that market. We do
have the experience of the ECB in Europe, which has been doing
that for years, and it’s created a somewhat zombified corporate
landscape. But it hasn’t prevented them from going through the
same spread dislocation that we’re going through here.
Markets will go back to reckoning with how fundamentals
are impacted by everything that’s going on. A lot of these com-
panies in the lower part of investment-grade and below just won’t
be able to survive.
JC: When would you buy back into credit?
OA: There will be incredible opportunities as a result of this. If
we can pick up our eyes and look out over the horizon of just over
the next few months, the opportunity on the back of this will be
phenomenal, and high yield especially generates great returns for
those who judiciously put capital to work during times like this.
The credit market hasn’t yet gone far enough to price in the
types of defaults that we will likely see on the back of this. The<GO> INSIDE THE TERMINAL 21