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BBB is junk

700 billion of refis in corporate America coming in 2019.
Per recent Barron’s article (1/12/19), should be significant downgrades in corporate credit.
We believe downgrades roll down: i.e. BBB to BB+, BB+ to BB, etc.
We believe we retrace the trump trade in 2019.
We are looking for CLO/Floating Rate spreads to hit 2016 levels:

  • AAA: L + 150bps
  • AA:    L + 250bps
  • A:       L + 400bps
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