Artisan Partners Credit Team portfolio manager Bryan Krug provides a history of the credit space and examines the dynamics between public and private credit markets.

Bryan Krug is the lead portfolio manager for Artisan Partners Credit Team. This article represents the views of Stewart Foley of InsuranceAUM.com and Bryan Krug as of the 17 April 2023 and those views and opinions presented are their own. The views and opinions expressed are based on current market conditions, which will fluctuate, and those views are subject to change without notice. While the information contained herein is believed to be reliable, there is no guarantee to the accuracy or completeness of any statement in the discussion.

Fixed income securities carry interest rate risk and credit risk for both the issuer and counterparty and investors may lose principal value. In general, when interest rates rise, fixed income values fall. High income securities (junk bonds) are speculative, experience greater price volatility and have a higher degree of credit and liquidity risk than bonds with a higher credit rating. The portfolio typically invests a significant portion of its assets in lower-rated high income securities (e.g., CCC). Loans carry risks including insolvency of the borrower, lending bank or other intermediary. Loans may be secured, unsecured, or not fully collateralized, trade infrequently, experience delayed settlement, and be subject to resale restrictions.

Spread is the difference in yield between two bonds of similar maturity but different credit quality. Covenants are a commitment in a bond or other formal debt agreement that certain activities will or will not be undertaken. Credit Quality Ratings assign a letter grade to a company's debt; AAA typically indicates the highest credit quality and D indicates the lowest. Discount Margin (DM) is a type of yield-spread calculation designed to estimate the average expected return of a variable-rate security, usually a bond. Investment Grade indicates above-average credit quality and lower default risk and is defined as a rating of BBB or higher by Standard and Poor’s and Fitch rating services and Baa or higher by Moody’s ratings service. EBITDA stands for earnings before interest, taxes, depreciation, and amortization is a measure of a company's profitability of the operating business only.

This material is provided for informational purposes without regard to your particular investment needs. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. This material shall not be construed as investment or tax advice on which you may rely for your investment decisions. Investors should consult their financial and tax adviser before making investments in order to determine the appropriateness of any investment product discussed herein.