PGIM Fixed Income: Credit where credit analysis is due

Why examining markets is critical to navigating economic damage

The breadth of the economic shutdowns to contain the spread of the coronavirus will affect nearly every sector across the global corporate universe, writes the PGIM Fixed Income team.

Therefore, credit selection will be paramount to generating positive alpha.  In tackling a solvency and liquidity analysis across various global industries, the PGIM Fixed Income credit research team of more than 100 analysts started with the following base case assumptions: two quarters of negative growth in Q2 and Q3, and 12 weeks of a work from home/shelter in place environment - with most commercial locations closed except for essential goods and services. The closures could imply a prolonged period of very little or no revenue for the most affected credits, which could also exper...