As we enter 2016, credit investors have much with which to be concerned. A significant decline in commodity prices, softer global economic growth, heightened event risk and thin dealer liquidity have all pressured credit spreads. While these risks remain, we turn our focus to the following question: “Where are we in the credit cycle?” The answer to this question is a key component in determining whether a rise in credit spreads is an opportunity or a warning signal of the arrival of the next credit cycle. In fact, it may be both.
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