TCW's Koch Says Credit Cycle Is 'Quite Mature'

Where are we in the credit cycle? Very quickly, I would say we think the credit cycle is quite mature and we do expect there to be some challenges ahead both in public and private markets. And we can come back to that. We don't think that necessarily the equilibrium rate is 5 1/2%, but it's also not zero, which means that by definition, things are going to get more restrictive ahead of us. And then you just have to think about the vulnerability of companies, clearly the ones in the IG space that have already turned out their debt or more secure. High yield has shorter maturities, they're going to have to refinance obviously eventually at higher rates. And then the most exposed would be those companies in in floating rate structures, which we can talk more about. The second point I would make and I alluded to it, but I just want to emphasize it, is that we do think markets are too complacent now. We don't think the the very record tights that we have on credit spreads are reflective of some of the real challenges we have in the economic backdrop.