Corporate borrowers are taking advantage of strong investor demand in the leveraged loan market, with Nielsen Holdings, Ensemble Health Partners and SunSource among those upsizing deals and securing cheaper financing. At least 29 loan offerings totaling more than $35 billion have seen terms improve for borrowers this year.

Quant investing is gaining traction in corporate bond markets as electronic trading expands and improved data makes it easier to apply systematic strategies in credit. Asset managers are increasingly using models to identify pricing inefficiencies and relative-value opportunities in a market historically shaped by dealer-driven trading.

Several European banks plan to increase their use of significant risk transfers to manage regulatory capital more efficiently. The European Central Bank, however, has warned about the potential risks of synthetic securitization.

Shares of leading alternative investment firms experienced their steepest January declines since 2016. Despite positive earnings reports and rising client payouts, these firms saw significant drops. The declines come amid heightened market volatility, investor scrutiny over fees and exits, and concerns about policy shifts from President Donald Trump, overshadowing broader S&P 500 gains for the month.

Eurozone banks tightened corporate credit access in Q4 and expect further tightening amid economic uncertainty, particularly regarding trade policies, according to the European Central Bank's Bank Lending Survey. The survey notes that lending growth, while accelerating, remains below pre-pandemic levels. Corporate credit tightening was most pronounced in Germany and France, while Italy and Spain saw no change.

Banks expect business loan demand to strengthen this year, driven by expectations of lower interest rates and higher spending, according to the Federal Reserve's Senior Loan Officer Opinion Survey. Demand from large and medium-sized firms was the highest since the second quarter of 2022, while demand from small firms was flat. Banks don't expect to tighten lending standards further this year, but they anticipate higher delinquencies and charge-offs for small-business and auto loans.

European leveraged loan issuance surged to a record 8 billion this week, driven by private equity-backed firms seeking to reduce borrowing costs amid strong investor demand. Most activity involved repricings and refinancings, with companies like Dechra and Ahlsell significantly lowering their interest rates.

The high-yield bond market, formerly known as the junk bond market, has become safer as the percentage of bonds rated BB or better has risen to 59% from 41% in the past 15 years. Riskier borrowers are now raising funds through leveraged loans and private credit, which offer more flexible terms.

The Federal Reserve has revised its liquidity guidance, allowing banks to rely more on Federal Home Loan Bank funding during stress tests, a move that has drawn criticism from former regulators such as Michael Hsu and Graham Steele. The change, driven by Fed Vice Chair for Supervision Michelle Bowman, marks a significant shift from post-Silicon Valley Bank consensus, which emphasized preparedness to use the Fed's discount window. While some see the move as pragmatic, others view it as a political shift away from previous regulatory approaches.

Claudia Buch, chair of the European Central Bank's Supervisory Board, discusses in an interview the ECB's plan to expedite approval for securitizations with significant risk transfer without compromising resilience standards. Buch expresses concern about potential financial stability risks, especially from synthetic securitizations, and emphasizes the need for underwriters to monitor underlying risks.

Crypto companies and Wall Street banks are clashing over the role of stablecoins in the financial system. While crypto advocates see stablecoins as a modern, efficient alternative to traditional money, banks argue they pose risks to financial stability. The debate centers on whether crypto platforms should be allowed to pay interest on stablecoins, a practice banks oppose, fearing it could drain deposits from regulated institutions. The outcome of this regulatory battle, influenced by both the banking lobby and the crypto industry's growing political clout, could reshape the future of global finance.

John Schindler of the Financial Stability Board countered industry pushback against regulatory measures for nonbank financial institutions by clarifying the FSB's risk-based approach. Schindler said that the FSB does not seek to impose uniform bank-style rules but rather to address specific vulnerabilities. Schindler also stressed the importance of regulation given the sector's critical role in the financial system, despite concerns from industry groups about potential overreach and market impacts.

The IACPM 2026 Spring Conference will take place in Berlin, Germany on April 22-24 at the Hotel Palace Berlin. The Conference is offered to members and friends to explore critical trends shaping Credit Portfolio Management. Non-members who are eligible for membership are welcome to attend two conferences before membership is required. Be part of the conversation shaping the future of CPM -- register now. Group discounts and preferential hotel room rates are available. For more information go to iacpm.org or for questions contact Felicity Taylor, felicity@iacpm.org.