PPM America -Thu, 11/06/2025 - 21:36

Old and New Risks Test Faith in Market Valuations

CIO Perspective

So far, tariff-related headwinds have failed to durably dent the march higher in market valuations. For example, the spread of the Bloomberg US Credit Index recently reached 68 bps, the tightest level since 1997.¹ Our rigorous focus on fundamentals compels us to examine whether current bond spreads fully reflect all the risks that exist in the economy and the financial system (inflation, consumer resiliency, private credit lending).

Also in today’s newsletter:

Employment Infographic: We take a closer look at the unique low hiring, low firing aspect of today’s labor downturn.
Investment Grade: Credit remains supported by strong technicals and macro fundamentals, but tight spreads prompted a shift toward higher-quality assets and flexible positioning.
High Yield: During yet another positive quarter, the strategy reduced overall portfolio risk by adding exposure to tighter spread buckets. Other investment moves included adding M&A beneficiaries and shorter maturity (’28-’30) bonds at prices modestly below par that we expect could be refinanced early.
Commercial Real Estate: CRE debt investing looks increasingly attractive as rate cuts, fewer negative headlines and improving visibility across property types support renewed capital interest. Read more to see how each property type is dealing with its own supply and demand indicators.

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Contacts

PPM America

Established in Chicago in 1990, PPM America, Inc. (PPM) is a US-based institutional asset manager with $90.09 billion in assets under management as of September 30, 2025 (1).

Originally founded as a captive asset manager for a global insurance company, we now oversee more than $69 billion on behalf of insurers globally. PPM exists to consistently support our clients in achieving their long-term value goals and has the experience and the expertise to support insurer’s unique and evolving needs across a range of investment solutions including public and private fixed income, real estate and private equity.

(1) AUM includes committed but unfunded capital for PPM’s private equity and commercial real estate businesses. AUM includes both securities issued by PPM CLO vehicles held by PPM separately managed account clients and the underlying collateral assets of the CLO vehicles managed by PPM.

Bob Meikleham
Managing Director, Global Client Group, Insurance
bob.meikleham@ppmamerica.com
312-843-5929

https://www.ppmamerica.com/

225 West Wacker Drive, Suite 1200
Chicago, IL 60606

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