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Alpinum Investment Management’s Alternative Credit Letter offers our experts’ latest assessments on the global credit markets, as well as fiscal and monetary policy developments.
Alpinum Investment Management is an asset manager of collective investment schemes authorized by the Swiss Financial Market Supervisory Authority (FINMA). The funds managed and promoted by Alpinum Investment Management including the sophisticated absolute return model portfolio strategies are eligible for distribution to qualified investors in Switzerland.
Our investment funds are domiciled in Luxembourg, Liechtenstein and Switzerland.
With the arrival of the pandemic crisis, the FED had cut rates
aggressively close to zero. In addition, it had announced an adaption of
its interest rate policy towards an “average inflation targeting” and that it will keep short term rates low for a multi-year period.
Since late 2020, the long end of the USD OIS swap curve has started to
steepen, but no Fed Funds rate hike is priced in before 2023 as the graph does well demonstrate (doted green line for expectations).
Chart 2) below illustrates the curve steepening in the US rate market (vs. 6 months ago), whereas the EUR curve did not move and is anticipating lower inflation expectations compared to the US economy.
Repeat default activity remains elevated in 2026, with ten of the twenty-nine default actions year to date involving repeat offenders (34%). This marks the fourth consecutive year where repeaters account for at least 30% of total distress events, following a record 41% in FY25. Since 2008, 20% of all default actions (233 of 1’165) have
Repeat Default Activity Hits Multi-Year Highs Read More »
The European credit market continues to exhibit a positive rating migration trend, heavily skewed toward upgrades. Year-to-date, eleven rising stars (issuers whose credit ratings have been upgraded from high yield to investment grade), representing EUR 9.2 billion, crossed over into high grade. Conversely, only three companies suffered downgrades to fallen angels (issuers that lost their
European Credit Quality: Rising Stars Maintain Q2 Lead Read More »
While broader investor sentiment remains constructive and overall junk spreads hover near historically low levels, fears of a stagflation shock from the Middle East conflict are souring sentiment toward the weakest global corporate borrowers, many of which binged on cheap debt during the era of ultra-low interest rates. Consequently, high yield investors now require about
Growing Divergence Across High Yield Spreads Read More »
The recent tightening reflects improving risk sentiment following the still fragile ceasefire and reduced geopolitical risk premium. If we look specifically at the most vulnerable tier of the high-yield market, the share of distressed high yield securities, defined as those with an OAS (Option-Adjusted Spread: the yield premium over risk-free rates accounting for embedded options)
Continued Compression in Distressed Ratios Read More »
Euro credit upgrades continue to dominate in early 2026, maintaining a 4:1 lead over downgrades. Following a strong 2025, where 20 “rising stars” (issuers upgraded from high-yield to investment-grade) outpaced 14 “fallen angels” (issuers downgraded to high-yield), four companies (Unicaja Banco, Abanca Corporación Bancaria, National Bank of Greece, and Autostrade per l’Italia) have already climbed
Euro Credit Resilience: Upgrades Outpace Downgrades Read More »
While the conflict’s evolution remains unpredictable, the outlook for specific segments remains resilient despite elevated tail risks, particularly in sectors supported by fundamental drivers. With oil and gas at $90/bbl and €50/MWh, Eurozone inflation is projected to reach 2.5%, a level unlikely to necessitate further ECB tightening. Strong household savings and government support should mitigate
Geopolitical Tail Risks and Bank Capital Opportunities Read More »
The European high yield market concluded 2025 with a notional default rate of 3.2%, representing a slight reduction compared to the previous year. A significant trend within the data is the robust recovery rate, which reached 62% in 2025, well above the long-term median of 41%. This high recovery level effectively limited the actual loss
European HY: Default and Recovery Rates Summary Read More »
The European High Yield market experienced an exceptional surge in activity throughout 2025, marking one of its most robust issuance periods of the decade. Annual volumes surged to an equivalent of EUR 132.1 billion, representing an 8.8% increase year on year. This activity comprised 263 tranches from 190 different issuers, a total surpassed only by
European HY Resilient Issuance Amidst Sponsor Stagnation Read More »
High Yield gross supply in 2025 reached EUR 110 billion, the second highest level on record and broadly in line with the market forecasts, representing an 8% increase from 2024. Corporate issuance rose 20% year on year to EUR 90 billion, driven mainly by the consumer and communications sectors. In contrast, banking issuance declined sharply,
Record Supply Momentum in High Yield Read More »
As anticipated, the Fed implemented a 25bps rate cut, setting the new target range at 3.75–4%. The FOMC revealed that quantitative tightening will end on December 1st. Once the run-off concludes, agency debt and MBS will be reinvested in Treasury Bills, while Treasury maturities from October and November will be reinvested across the curve. Pockets
Repo Rates Surge as Liquidity Tightens Read More »
