Investors today have numerous questions about the strength of the global economy and where to invest worldwide when markets are influenced so heavily by policy developments.
-Mark R. Kiesel, managing director, PIMCO
- Highly expansionary global monetary policies and easier financial conditions are changing the risk and reward tradeoffs within firms’ capital structures.
- Investors should favor companies in industries that can generate solid top-line revenue and free cash flow growth. Strong earnings growth can reward equity holders, while healthy free cash flow can be used to deleverage balance sheets to the benefit of bondholders.
- We expect U.S. housing and energy, Asian and U.S. gaming, Asian gas distribution and U.S. hospital industries will continue to offer credit investors stable or improving balance sheets and solid growth. However, with shareholder activism and re-leveraging risk on the rise, we are becoming increasingly cautious on many other areas and industries.
