Oaktree's Poli Expects Increased Volatility in Credit Markets

Oaktree Capital Management's Danielle Poli Sees Opportunities in Distressed Debt

Global credit markets remain relatively resilient, with Oaktree Capital Management's Danielle Poli stating that the moment to scoop up distressed debt is not yet here. As a portfolio manager, Poli believes that bigger opportunities for price movement may be further down the line, despite current opportunities to step in.

Distressed debt managers, such as Oaktree, make money when other investors need to sell credit assets at a large discount to raise liquidity and meet redemption requests. However, Poli notes that the highest quality part of the market is trading up, making it difficult to say that it's currently a "big step-in opportunity." Spreads on high-yield bonds have widened by approximately 3 basis points this week, but are still near historical tight levels, with average sub-investment grade yields around 7.1%.

Oaktree is focusing on selectivity and diversification, picking individual securities and pairing them within a multi-asset strategy. This approach allows investors to shift toward relative value as the market moves. Poli notes that geopolitical tensions and software debt defaults are creating opportunities in diversifying credit, liquid debt, and opportunistic situational lending.

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