Chris Bonner, head of Leveraged Finance in the Americas at Goldman Sachs, spoke at the Goldman Sachs Leveraged Finance Conference about his views on the leveraged finance market and leveraged buyouts (LBOs). He expressed optimism about the sector’s prospects despite ongoing economic and policy uncertainties.
Bonner highlighted that leveraged credit issuers remain fundamentally strong. Key credit metrics such as leverage and debt servicing capacity are healthy, which provides resilience amid market volatility.
He noted that while tariff-related uncertainties and slower growth could pose risks, the overall quality of high yield issuers has improved in recent years. This improvement, combined with limited new supply, supports a positive technical environment for leveraged finance.
He also mentioned that the leveraged finance market continues to function well, allowing investors to adjust exposures as needed.
Bonner pointed out that about 10% of leveraged finance securities might be affected by tariffs, mainly in sectors like autos and retail, which have significant cross-border supply chains.
Conversely, sectors such as diversified manufacturing and basic materials are more insulated from tariff impacts.
Regarding strategic moves, Goldman Sachs has shifted some exposure from bank loans to high yield bonds due to better relative valuations.
Bonner sees value in financials, technology, and diversified industrial sectors but remains cautious about retail, media non-cable companies, and energy. He also emphasized the importance of bottom-up security selection to navigate market challenges effectively.
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