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Published: 02.04.2026

By: Craig Nicol, Managing Director, Head of Global Credit Strategy

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2026 Outlook

The outlook for 2026 is one of the most complex in recent memory. Credit spreads are extremely tight across investment grade and high yield, in both Europe and the US. On the surface, this reflects a supportive macro backdrop: growth momentum appears to be very strong in the US while the tailwind from defence spending will mean a return to trend-like growth in Europe.

What these headline valuations obscure is how non-linear credit markets have become. Tight spreads are co-existing with a prolonged default cycle that, after years of financial repression, is now generating real dispersion across the investable universe. Outcomes are increasingly idiosyncratic, shaped by capital structure, documentation and access to liquidity rather than incremental changes in growth.

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Published: 02.04.2026

By: Craig Nicol, Managing Director, Head of Global Credit Strategy

2026 Outlook

The outlook for 2026 is one of the most complex in recent memory. Credit spreads are extremely tight across investment grade and high yield, in both Europe and the US. On the surface, this reflects a supportive macro backdrop: growth momentum appears to be very strong in the US while the tailwind from defence spending will mean a return to trend-like growth in Europe.

What these headline valuations obscure is how non-linear credit markets have become. Tight spreads are co-existing with a prolonged default cycle that, after years of financial repression, is now generating real dispersion across the investable universe. Outcomes are increasingly idiosyncratic, shaped by capital structure, documentation and access to liquidity rather than incremental changes in growth.