Alcentra’s Leland Hart: No Signs of the Apocalypse

In November we met with a team from Alcentra, manager of BNY Mellon Floating Rate Income. Alcentra’s Leland Hart doesn’t think we are at the end of the cycle yet based on floating-rate loans market fundamentals and the macro backdrop. What is late-cycle is investor behavior. This year, the credit markets have been starkly bifurcated, with the highest-quality segments outperforming year to date. Still, the Alcentra team thinks BB-rated loans offer the best risk-adjusted return potential right now. Loans as a whole can still trade down, but the Alcentra team doesn’t see widescale defaults like 2009 given there are few parallels to borrower characteristics before the last financial crisis.