Post-Labor Day market conditions continue to favor credit issuance of all stripes. Rather than being hampered by uncertainty surrounding tariffs, inflation, growth or rates, borrowers and investors have decided these dynamics have been settled in favor of “risk on!”

What then are the real worries for credit? While lower rates and less chance of a recession have eased the pressure on balance sheets and financing expenses, this hasn’t prevented some observers from predicting higher defaults down the road. Digging more into the details reveals a more optimistic story.

Eric Rosenthal, KBRA’s default guru, spoke recently on the “Three Things in Credit” podcast suggesting that credit default rates for high-yield bonds, broadly syndicated loans, and private credit should remain at subdued levels for the foreseeable future.