2019 Sector Teams’ Outlook: Bank Loans

We expect the formation of collateralized loan obligations to remain a positive technical driver for loan demand through 2019.

We believe that as the Federal Reserve raises rates, future loans will have higher coupons, which the market should anticipate.

We have a positive outlook on corporate fundamentals. This, coupled with the low volume of loans maturing through 2020 and high rates of refinancing, should help keep default rates below historic averages.

At the end of 2018, loans in our portfolios averaged historically robust interest coverage ratios.