The Bond Market in 2026: Unpacking Dynamics and Trends

Hello and welcome to Credit Matters. The podcasts where credit absolutely matters. I'm Shankar Amkishnan, your host and head of US Credit and Global Market Engagement at IGM. I'm here with my colleague and co-host Bruce Clark. Hi. Hi. Bruce is the head of rates and market coverage at IGM. So today we are going to talk about bond issuance by US and Yankee banks that have contributed the most to what has been record levels of primary bond issuance in dollar markets and abroad. The big six US banks bond issuance and so far up to the third quarter of this year, which is still on, is already near $150 billion and has already exceeded last year's level. What's behind this borrowing spree? We will also talk about the impact of the Iran conflict on the syndication process, the outlook for investment grade bond issuance this year and more. And these critical questions will be addressed by Pranav Gupta. Welcome, Pranav. Thank you for having me. Pranav is responsible for a global US dollar investment grade debt distribution and syndication at Morgan Stanley. He oversees the financial sector across global banks, insurance, asset managers, aviation, lasers and auto companies. He has been with Morgan Stanley for over 15 years and has worked in several positions within the global capital markets division during his career. He started in the investment grade debt coverage group and then transitioned to the firms acquisition finance team where he worked closely with M&A and investment banking partners, the real star in Morgan Stanley. Welcome, Pranav. Welcome. Let me kick it off, Pranav. I actually want to start off with a more broader question. What is your view on where we stand at this point in terms of interest rates with the run conflict still on? Where do you see the direction of rates, the impact on the global economy and how does all this inflationary impact of the conflict play into these markets? Sure. And first of all, Shankar and Bruce, good to be on this with you all. Shankar, I think you're asking a very topical question just because in the last week we've seen a re-escalation of the conflict in the Middle East and maybe even in the last few days we've seen a little bit of escalation in Yemen with the Houthis attacking ships in the Red Sea. So that certainly has been putting a little bit more pressure on the interest rate market. The tenure treasury is now hitting 470. That's a level that we haven't seen in nearly two years' time. And it is the highest level that we've seen all year. So it is certainly adding some pressures to the inflationary commentary that we have been dealing with all year. What the data is showing us though, if you look at the CPI data that came out last month, the US economy is managing quite well. We haven't seen a material flow through impact of higher oil prices, really impacting the CPI data. And that's something that I think is complicating matters as it relates to investors' ability to predict what the future holds. The recent events that I alluded to clearly would indicate that there are upward pressures on not only interest rates but also CPI. We have a very critical meeting of the Fed that's due next week. So we will have more direction and more clarity with regards to what the Fed is thinking after that meeting in about a week's time. But for now, what I would say as it relates to the investment grade bond market, higher rates have been supportive to the market. And that makes sense. What we've seen is continuous inflows into the asset class with investors across categories, whether it be insurance companies, asset managers, corporate cash accounts, state funds, all looking at Treasuries and saying, "It's a very attractive yield environment for me to deploy my capital." And what are the alternatives? The alternatives for a lot of these investors are keeping the capital in a money market fund that had a pretty attractive rate a year or a year and a half ago before the Fed started cutting. Now that rate differential between money markets and where underlying Treasuries are continues to widen. So there is more incentive for investors to move that capital into the credit asset class. And that's part of the reason I'm sure we'll get to this in a second. Part of the reason why we've seen spreads for our borrowers or clients who are issuing in this market remain extremely tight and actually move lower in a environment where there's high inflation pressures and higher interest rates. But so far, so good. So do you think it is more of technical factors which are playing at this point, but fundamentally also you think, "Cockets are doing well." Is that also one of the reasons why people are jumping into the asset class? I fully agree with that, Shankar. I think if you look at the earning cycle, not only just the one that is about to kick off for Q2, but if you look at the last few earning cycles, the US economy is, is booming. It's firing on all cylinders and we've seen strength across the sectors. Part of that is driven by this new phenomenon of AI and the growth that that is going to create and the efficiencies that that is going to create across sectors. The other part of it is the US economy, it's withstanding some of these pressures that we talked about, whether it be inflationary. And the administration has prioritized ensuring that businesses can operate in an efficient manner. One of the themes of 2026 has been an increase in elevation of strategic activity by our clients. So we've seen more M&A activity, more issuers and clients looking to do strategic transactions that highlight that the boards and the CEOs and the C-sweets have confidence, not only in their business in the current moment, but what the future holds. So there is a lot of confidence in the boardrooms right now that is allowing these clients to take quite large strategic action and that supported by the underlying strength of the economy and the US remains a center point for global demand. And it remains for now the centerpiece for the new phenomenon of AI and we are seeing clearly a lot of focus on that space in particular here in the US. So, Bernad, I'm sorry, thanks. You mentioned earlier an escalation of the interest rate complex and inflation fears in the past week and to that point everybody's favorite WIRP page on Bloomberg, the betting odds for a rate hike next week have risen from 10% to more than I'm looking at it now. So, it's more than 40% for next week. Is that part of your conversation with clients, the people really think that the Fed could raise rates next week given the soft inflation data that we just saw and the anemic payrolls number? It's a very, very good question and I think the 40% likelihood of rate hike highlights the uncertainty that exists in the marketplace. The CPI data would tell you and the initial cause of the conflict or the ceasefire that was reached between the US administration and the Iranian leadership would indicate that the pressures were lessen and we had seen oil come off the highs and trade trade back into the 70 handle. Now, and again, it's a recent phenomenon only been a week that we've seen all of that basically reverse. So, it's a really good question. I think what I would tell you is from our perspective at Morgan Stanley, our strategists have the view that the Fed is going to remain on hold for the balance of the year. What they are going to lean on is the data and they aren't going to get hung up on week over week changes and rather rely on trends. What we've seen is CPI actually show that inflation is on a downward path, not an upward path, despite the escalation of the conflict in the spring. And secondly, you highlighted the strength of the labor market. We had inflation apologies. The initial jobless claim data come out today and it was the lowest initial jobless claim report since the 60s. Exactly. Right. Exactly. So we are seeing a very, very strong labor market, which is allowing the Fed to remain a little bit more balanced and be more data driven and be more in a way in C mode with regards to any action that they will take. So again, our view at Morgan Stanley is that they stay on hold for the bounce of the year into early 2027 and we believe by then the inflationary pressures should have eased and the Fed can actually start cutting again thereafter. That happens to be my view as well, but it's gotten to be kind of a lonely out this morning. Now that as you mentioned earlier, you've got a war on two fronts now and two choke points in the Middle East transit choke points being effectively shut down, which complicates things. I think to your point about employment, the new Fed chair has repeatedly expressed the confidence that productivity led expansion in the economy is nothing to be afraid of and that traders shouldn't automatically connect strong and labor data with higher interest rates. So the two can coexist lower interest rates, but a strong economy can coexist. We'll see if that plays out, but that's his contention. Yep. Right. We'll do it with that. But actually all this rush of issuance we are seeing in terms of all this borrowing, is that to get ahead of this whole inflationary pressure, if rates are going to be cut at some point and they're going to remain on hold? Is that the reason why everyone is going out now rather than wait? Is that? Yeah, Ashankar, it's a good question and the short answer is no. If I were to rewind the clock and think about what was happening in 2025, 2025, we had a Fed that was cutting. And in that moment in time, a lot of our corporate clients were looking at the rate backdrop and saying, should we wait? Should we think about issuing in the future because interest rates are headed on a downward path and we may be able to enter and lock in coupons that are more attractive? As soon as it became clear in the earlier part of this year that further cuts are pretty much off the table and we had started talking about, you know, maybe even hikes. As that became clear, a vast majority of our client base came to terms with that higher for longer rhetoric. It's something that we have been predicting as a potential outcome for probably two years now. And now it's finally playing out. So what we've seen from our clients is a realization and acceptance of the rate backdrop. And what they're looking at is the strength of the economy, strength of their businesses and the return on their investments, whether it be strategic or in technology. And the outcome of that is that they are issuing debt as and when needed. And they are not as focused on the underlying rates. If I were to again go back to the themes from 2024, 2025, a lot of our corporate issuers were accessing the bond market but accessing the bond market in a way that was bridging them to the future. They were issuing short data securities in the hope that they could refinance those in a few years time when rates were lower. That mentality certainly is no longer present. Maybe the next natural question, Shankar, is what is the duration of issuance nowadays? Are we seeing issuers go out the curve and issue 10 years, 20 or 30 year paper? And again, I would say that yes, they are willing to go and issue 10 and longer year duration securities. And part of the reason why they're doing that is because there's a lot of demand for that product. If you think about insurance companies, they naturally have needs in the longer end. And secondly, with a 30 year tragedy that's sitting north of 5%, that's making the return dynamic very attractive for the investors. There's a lot of capital that is looking to be deployed in the long end and issuers are appealing to those investors by accessing that part of the curve. Additionally, one of the themes of 2026 has been increased issuance. A lot of that is coming from what we call jumbo transactions, large transactions that typically are 10 billion to the plus. And this year we've seen close to 10 transactions that have been 25 billion to the plus. And when you are accessing the market for that kind of size, you typically want to access all potential duration terms available to you. So many issuers will issue as short as two years and as long as 40 or even 50 year bonds. and so it becomes a, a, a, a, a, a, a, anor, used to access more capacity, right, and it's interesting, since we're gonna be focusing a little bit more on the bank community today, what 2026 is also brought, is some long dated, rare bank issuance. We've seen some financial issuers do 20-year and 30-year paper, and it's driven by a, a, a similar driver. It's a, it's to access unique pools of capital from the insurance and pension accounts that are driving strong bids for that 20 and 30 a part of the curve. In the early part of 2026, there was so much demand or a long end paper that investors were actually willing to price those securities very, very flat to tenure securities on an absolute spread basis. And for the financial issuers which, they tend not to go out that long, the curve was actually inverted. So from a spread perspective, if an, if an issuer was looking at this long duration market, it was actually looking quite attractive. So there are multitudes of reasons why we continue to see issuers access along into the curve, but I think I can firmly say that our clients are not shying away from it. We will see, we will have to see if the upward trajectory in rates that has occurred over the course of the last week, if that continues. And if that causes any shift in, in, in mentality, but so far, we haven't seen that happen and our dialogue with clients would indicate that they remain open to accessing the parts of the curve that would achieve the best and most efficient executions for themselves from a ultimate pricing perspective. So like long term yields, like you said, 30 or above 5% or hovering around 5%. There's no real expectation that they will start coming off from 5%. So almost like they're going to hover there. And again, coming back to Bruce's point, right? If we are, if we believe that, that there are continued inflationary pressures, whether it be geopolitical driven or not, it's hard to see a scenario where we see a material lower in rates. And I don't get the sense in my conversations with our clients that there are many who are waiting for that to happen, right? They are continuing with their plans and they're continuing with their cat-back spend and their strategic M&A initiatives and accessing the bond market in this, in this rate backdrop. And a 5% or 30 year is not really stopping anyone. Right. But do you see, do you see, plan of any sign of fatigue or something like how much we are already over a trillion this year? Is it possibly going to 2 trillion? So that is what some people are expecting. But we are not seeing any sign of fatigue, right? Like, is there any sign of fatigue? Where is all this money coming? Yeah, it's a, it's a, it's a topic of the day. It's a very, very good question. I would probably have to address it in a few different points. The first point is from a demand perspective. Where is the money coming from? Right. Let's address that question. The first is if you rewind the clock, what happened about five, five years ago? We were in the midst of COVID and we saw a material increase in borrowing during COVID that was driven by a little bit of bolstering your balance sheet to ensure you have capital to sustain your business in an environment that was very uncertain. Our clients didn't know, you know, business or shot people working from home. They didn't know if they could continue to have the same kind of revenue and net income growth that they were seeing prior to COVID and they were bolstering their balance sheet. So there was a lot of issuance, right? 2020, we saw 1.8 trillion issued that was the all time record and still stands. A lot of that debt that was issued in 2020, 2021 is now rolling off. A lot of that was issued in five years. Tenors, a lot of that is maturing. So the investor community is naturally being replenished with capital that is being given back to them in the form of maturities of those securities. So that's one natural kind of refilling of the coffers of the investor base. The second is as we talked about the rate environment, much more attractive now than it was five years ago. So which treasures where they are, we continue to get a lot of inflows into the asset class. If you believe it or not, during the first half of 2026, we've seen inflows, it clips the same period in 2025. So 2026 first half versus 25 first half, almost four times the amount of inflows. And where is that money coming from? It's hard to really track it down, but it's from, I would say, a couple of sources. The first is money market funds. market funds had close to $9 trillion sitting in them going into 2026. That number is still hovering around $8 trillion as of this moment in time. So it's partly money market funds. It's partly taking profits in the equity markets, right? Equity markets continue to hit all-time highs in many quarters, especially in the springtime recently. Investors are taking some capital and moving it from equities into fixed income. So the technical support in the market is coming from natural maturity redemptions and inflows driven by the attractive yield. And that same theme about the inflows should also hold true for some of the international investors. They are also looking at the US market, which is offering the highest outright yields. So that's the demand side of it. On the issue inside of it, I talked about a couple of themes already, but I'll just restate them. The big drivers of issuance in our market this year have been CapEx. And that's obviously a theme you've talked about with a lot of other people in the tech sector. That is a theme that is not going to stop any time soon. Right. And a lot of our clients are putting out their second quarter earnings soon and they'll be commenting on their CapEx needs. And the expectation from the market is that those numbers are only going to grow as we head into 2027, not declined. And a lot of that CapEx is being supported by borrowing in the investment-grade debt market. Right. So we do anticipate that that theme is one that continues going forward. The second is M&A. There was a fear during the initial onset of the Iran conflict due to the uncertainty that it caused that M&A could take a little bit of a backseat. There were less confidence in the boardrooms to do strategic transactions in that environment. We've actually seen that not happen. Actually, the opposite. We've seen M&A materially increase. Right. And that is driving investment-grade bond issuance because a lot of large Fortune 500 companies conducting M&A will finance those transactions in the debt market. Right. So, CapEx and M&A are the two major themes for corporate issuance in the debt markets and that's not likely to stop anytime soon. Right. And then the third, as you highlighted at the onset of the call, is we've seen bank issuance increase as well. Right. If you think about a bank in this market environment, given the volatility in commodities with all prices and rates, given the moves we're seeing just in the last week, in equities as, you know, the Iran conflict ebbs and flows, there's a lot of activity that our clients want to do and banks want to support their clients in conducting those activities and that requires the banks to have balance sheet. And so, you've seen growth and increase in borrowing from the large banks here in the US. For our clients in the regional bank space, they've seen material loan growth because their clients want to go invest, right, whether it be for CapEx or for M&A or for other growth opportunities. So they're seeing loan growth and they want to bolster their balance sheet to support that loan growth. So, this year, bank issuance, as you said, is already reached the alley that was set in 2025 and we're only sitting in July. Right. So, the likelihood that we'll surpass last year's issuance volume in the bank community is very, very high. Now, is there fatigue in the market? Like, I would say that there is some concernation in the market as it relates to some subsectors of the market. It's not a broad-based fatigue. There is a little bit of fatigue that is showing through as it relates to the tech sector because of the quantum of CapEx, that is being put through, but importantly, that is being flagged that will likely come in 2027 and 2028. And that is putting a little bit of pressure on the investment grade bond market as investors recalibrate their expectations for how much debt will be issued by this space and that is causing them to recalibrate their views on valuation. So, I won't say that there is fatigue in the ability for our clients to raise the capital, but there is a little bit of a recalibration in the cost of raising that capital because that's a very innovative cost, though, but I've been noticing all these new issue concessions or the new issue premium. It's not gone up materially, right? It's still in the single digits. I fully agree with that. There have been many large jumbo transactions that I alluded to in the tax base that have achieved $25 billion size deals with single to low double-digit concessions, which is quite amazing. I think what's happening in secondary market, though, is that we are seeing a little bit of a recalibration where the spreads move wider on the underlying basis. The concessions may not necessarily jump up to your point, but we are seeing a little bit of a move wider as investors recalibrate their views on valuation. Let me pick up on CapEx expectations as we all know yesterday afternoon, Google reported their quarterly numbers and what stuck out and what has entered into the macro conversation this morning is the fact that their free cash flow went negative for the first time. Bloomberg says it's for the first time since the company went public. I'll have to take their word for that. They up their CapEx guidance. For the first time in a long time, the conversation in the treasury market is not necessarily inflation, but one of supply now. It's like, "Well, all these hyper-scarolies used to fund through free cash flow." Now all of a sudden, negative free cash flow, it's like, "Well, obviously they've got to go somewhere to get the money for these CapEx plans." That's sort of entered the equation. Is that something that, as you said, it's causing people to rethink valuations. I assume that that's an ongoing process. That is something that is certainly topical. I read the same article and saw the same stats I agree with those numbers. On the heels of that, you are seeing valuations for this sector, move wider just today in reaction to that. I think what the market is suggesting is that they anticipate this type of commentary that Google put out to come from the others. Obviously, we will have to see what they say, but that's what the market is pricing in today. Does that mean that the people who come in later do they have to pay higher premium? Is that a possibility now? Yes, and Shankar, it's a good question, but I do think that the market is pretty bifurcated. I would say that for vast majority of our clients, the market is operating efficiently. If you look at the broader investment grade index, it's still hovering with a seven-handle. It's lower than where the index was at the start of the year. For vast majority of our clients, the borrowing spread above treasuries has moved sideways. In some cases, actually, tightened as interest rates have moved higher. To answer your question, I think in the tech space, there could be a scenario where as the guidance is put out around CapEx and it's become clear to investors that some of that or most of that may be funded in the debt market that could be, again, as I said, the recalibration and valuations. The next transactions have to pay a little bit more spread, not necessarily in concession, but in terms of the value that investors believe that they need in order to deploy the capital in that scale. That trend is something that could certainly happen if we continue to see the type of issuance of the quantum of issuance that we have seen in 2026. It's a lot of activity, a lot of demand, a lot of issuance, interest, a lot of M&A activity, all that. All this recent earnings stuff, which we saw, does that reflect? It's possibly reflecting the solid growth in what the bank businesses, like overall. That should help their issuance to get a bigger demand. I think all those comments are absolutely fair. I think the banks collectively had, I think, fair to say, blowout earnings for the second quarter and it's driven by exactly everything that we've talked about so far. All parts of the market are working efficiently. We've seen growth in the IPO space. We've seen growth in the investment grade market as we're talking about. We've seen growth in the leverage finance market, somewhat related to the themes that we've talked about here. If we think about the trading businesses, a lot of volatility and volatility means a lot of opportunities for our clients and that allows us to be helpful and participate in that flow. The valuations for the banks, extremely strong, the views from investors, fixing investors on the bank space, extremely constructive. That's why you haven't see any material move wider. in valuations for our bank clients, despite an overall market that is seeing a material increase in issuance. And when I talk to our investor clients, they are extremely constructive and supportive on the bank sector. - Right, and one of the interesting things is this issuance of regulatory capital kind of instruments. Like preferred, you've seen, which is used to ensure your leverage doesn't go up and count as a quity. Like, what is driving that? So is it because you have so much demand for loans, you're borrowing so much at the same time you want to issue something in leverage capital as well, right? - Yeah. - No leverage cap. - Yeah, it's a very good question, Shankar. I would say actually the reason for the issuance of the preferred tier one capital is primarily actually to refi securities that are coming due from five years ago. So the typical structure that the bank's issue is a perpetual security that's callable in five years time. And again, if we go back to the COVID era, we were seeing a lot of issuance in 2020-2021 from the banks to bolster their capital at that time. But what was happening at the time? Tribes were at 1%. And these issuers were able to issue preferred capital, perpetual capital, for the first five years that was locked in at a coupon of a three to four percent handle. Very, very attractive for those banks. But because interest rates were around 1% at the time, the spread that it resets to, so if the security is not called at year five, the spread resets versus the five year treasury today, which we know is elevated. And the spread is sitting at three to 400 basis points. - Right. - So if an issuer were to let that security continue, the coupon today would be something like seven or eight percent. - Right. - Versus what they had locked in initially at three to four percent. So a lot of our clients are looking at today's market environment and saying, "It's a good opportunity to refinance." What we have seen is the demand for yield product given this environment where spreads are very tight actually, right? So yes, the ten year treasury is at 470, but the index is sitting shy of 80 basis points. - Correct. - So that offers you an average return of about five and a half percent if you're just buying the index. These securities are offering you at times 100 to 150 basis points more than that. - Right. - So the demand for yield has caused investors to chase this product and drive the spread or our clients actually lower. So the pickup or the premium that these issuers have to pay above and beyond senior debt to issue preferred tier one capital has compressed to historic lows. - Wow. - And why does the demand exist? It exists because there's a lot of redemption's happening. So most of our clients are taking out securities that are callable and replacing that with new securities. And while the coupon today is elevated, given treasury rates are elevated, vast majority of our clients can achieve coupons that are still lower than what the existing securities would reset to. - Got it. - So win-win scenario for our clients. I do think that as rates move higher, that will continue to put pressure on the absolute yields that our clients can lock in. If I were to give you an example just last week, we let a transaction for Bank of New York. - Right. - They set a record low back end spread on a preferred security, a propon call five of 188 basis points. - Right. - The initial coupon was 615. And so that is the lowest that any bank has ever issued from a back end spread perspective. But since then, treasury rates have moved almost 20 basis points higher. So we do anticipate that future issuance of the security will require slightly higher yields such that the back end spreads remain in that zip code or higher. - So that is opportune timing basically. That's perfect. (laughing) - I think I think I wouldn't say that. I wouldn't take credit for that, but I think we got lucky with the timing. And as you know, as you know, I was just gonna say a vast majority of banks because of their frequency in the market. They tend to issue right after earnings. So what we saw from Bank of New York in that example and other clients in the market, they tend to issue sewer after their earnings are announced. So the timing is more earning cycle related than market related in that instance. So I would say it's more luck than wets. - So do you think, so if the back end spread is very tight, correct me if I'm wrong, then it reduces the incentive for the bank to actually call the security or pay back the security after the fifth year, right? So that means if you buy something, the chances are you're holding it for perpetuity, which I don't want that is. (laughing) - That's exactly correct. And that's exactly what investors have to determine if they're comfortable with. Because while they are receiving 6.15% for the next five years, the coupon thereafter is determined by the five year treasury in five years time, and which we can't predict. But what we know is that there will be 188 basis point pick up to that treasury. So to your point, the issue is unlikely to call that security if interest rates were close to zero percent again. If we were in a covert like environment and interest rates were very low, they aren't likely to call that security. On the other hand, if interest rates are here or higher, they may call it subject to how the primary markets are operating and they can efficiently refinance that security. - Right, right. Because on that, if that is the kind of risk, our investors so hungry that they're giving up their, possibility or giving the issue as this chance, like to sell them securities which are probably going to be cheap forever. - Right. And what we've seen so far this year is the answer to that question is, it's generally yes. We have seen multiple of our clients set new record back end spreads in this product category, driven by the strong bid from preferred funds, from insurance companies, from asset managers. And part of the reason why we're seeing that demand is also a little technical. I referenced that a lot of these securities that are being issued are actually to refinance other securities that are being taken out. So if you actually look at the maturedies or the calls of the preferred, they've exceeded the new issuances. So there's actually a net supply for preferred product and that is causing a very positive technical for this market. - Is that an inflection point you think for this that changes the other way, but in rest of say, that's it, we want to hire back in spring. - I think if you go back to the luck of the back of New York transaction and the timing of that in terms of setting a absolute new record spread from a back end perspective, I think that inflection point may have, we may have reached that. And part of that is, again, coming back to the interest rate backdrop. If you think about treasuries, the five year treasury is 20 basis points higher. - Right. - Over a week. - Right. - So there's external reasons, in this case rates, that could cause that to be the inflection point. - Right. So you might have seen the lowest point of back end spread at this point. - Well now, we will see what the future breaks. - And I wanted to ask you something also about this funding diversification. Like everyone is issuing in dollars. - Yes. - And the market has, I don't know, it looks like it has infinite capacity at this point. But at some point, it can't bear the weight of everything. Do you see a lot of demands from clients to help them go to other currencies as well? - Yeah, it's a theme that we've seen accelerated in 2026, not only from the corporate client set, but also from the financial client set. I think what's happened is that there's been a growing investor community in various regions across the globe. It's common for many of our clients to access the euro or sterling market. That's a pretty well established and mature market. But there are other markets globally that have become more mature over the last few years. - Right. - Canadian market, Australian dollar market, and the Japanese yet market, are the three that have emerged as sources of capital for our clients. Why do clients go issue in those currencies? One is a investor diversification play. So there are unique investors that only buy in those currencies that don't participate in dollar fixed income markets. So it's to broaden the pool of investors that are buying a capital. Second is additional capacity for some of our clients that maybe raising more capital than they are used to issuing in prior years. We have seen them access these global currencies in order to maximize their capacity. And if a client has local operations in that currency, in that country, if they can keep the proceeds in that currency, they benefit from the upfront lower coupons that some of these currencies offer. Specifically the European and sterling markets, the upfront coupons are much lower if you're don't have to swap those back to dollars. So for our, if to act for our global clients, multinational clients, many of them have local operations in the UK, in Europe, that are large. And if they can keep the proceeds there, it makes a whole lot of sense to do that. So you know, like one of the other growing teams in the market is about this whole BDC issuance as well. Like do you want to take us through a little bit of, because now I'm seeing deals which are coming in, they're doing pretty well. Earlier in the year, there was some nervousness. So has, have we turned the corner on the sole cracks in private credit narrative? Yeah, Shaka, it's a good question. I would certainly think that we have turned the corner from that perspective. I think that the rhetoric that had taken hold of the marketplace during the first quarter of 2026 was something that was more perception driven than fundamental driven in our opinion. I think as investors did more of their homework, had more conversations with the the private credit issuers themselves. They were getting more comfortable as time went on, and as they educated themselves. I think the reason why we saw some pressures in the early part of this year was driven by a couple of things. The first is there were headlines around redemptions that these private credit firms were seeing from their clients. And I think as we've seen it play out over the last few quarters, the private credit firms have highlighted, look, we are private credit firms. The investments that we invest in are not easily tradable. Some of them maybe, but not all of them. We've seen the concept of gating come into play and pretty much everybody has gated their redemptions to about 5% per quarter. We've seen a pretty consistent trend line where the redemption requests have moved lower quarter over quarter for these clients. Many of our clients actually are seeing redemption requests that are even below the 5% gating that they've set. So that's certainly a dynamic that has helped ease investors. Is there more transparency as well of these portfolios now? Absolutely. Absolutely. Exactly. There's more transparency that's being put through. And these PDC clients, of ours, are actively reporting on all of these metrics. The other thing that was coming through was a little bit of concern from the Fixic Investor side around how the underlying loans that these private credit firms had were being marked. And there was a little bit of inconsistencies that we were seeing across multiple firms who may be part of the same loan. And I think the sector as a whole has done a really good job of explaining how they marked their securities and been a little bit more transparent to your point in delivering that message to the Fixing Cym client set. So there's been a lot more time spent addressing the mythology that is being used on marks. There's a little bit more consistency across the industry. So I think it's a combination of factors. But as you alluded to, we've seen the market for that clients that reopen in the spring time frame. We've seen multiple transactions get extremely solid reception from the investor community. And part of the reason why that the PDC's base in investment grade markets is continuing to operate well is because they do offer a slightly defrancinated spread than what the broader investment grade market is offering. So the index, as I said, is south of 80 basis points. A lot of the PDC clients are offering spreads that have a two-handle associated with it. And one of the themes actually, despite the headwinds in the first quarter of 26, one of the themes over the course of the last few months is actually an increase of investors that are looking at this space. We've seen the investor base for private credit-related issuance actually grow as investors have become more comfortable with the space given some of the things I talked about. Right. I just have to make a comment as an old traitor. I have to be guilty of running down this blind alley when you see headlines about private credit funds, gating redemptions and things like that. This is the next stone about the roll down the hill and take the whole market with it. But guess like you, Pranav, you explain how the market almost self-corrected in demanding transparency and diffused that as an issue for the most part. That's exactly right. And Pranav, I read your bio earlier, but you've had a tremendous experience. How easy or difficult, especially in syndication or how easy or difficult is it to syndicate bank bonds? It's almost like they sell themselves. I wish it were that easy. But it's a good question, Shankar. I would say in many instances, we've seen the financial specific issuances kind of sell themselves to some degree, but the process is very similar for corporate. I would say that on the margin, the benefit that the banks have in particular is that they are extremely well followed by the investor community, primarily because of their cadence of issuance. Most of the banks are issuing multiple times a year in dollar bonds relative to our clients on the corporate side who typically will issue once a year or maybe even less frequently than that. So because of the cadence of issuance and the quantum of issuance from the bank community, there's a lot more connectivity and a lot more followership on the investor side in that space. Up until this year, we've seen financial issuance both from domestic and international banks, typically represent about 50% of total issuance in the marketplace. So that's a big number from a single sector. And for that reason, the investors remain very, very in touch with those clients. What we see from our dialogue with investors is every fixed and commandllist will listen to every bank earnings call. They will follow the earnings. They'll update their models and they'll stay they'll stay afresh. The second thing that happens is that the issuers in the financial complex will do more investor outreach with fixed fixed income clients because they are a large stakeholder just like the equity stakeholders. So there's a lot more investor engagement through conferences and and bilateral conversations that occur with specifically bondholders. So that makes when we syndicate transactions for our bank clients, whether they be regional banks or Yankee banks, a little bit easier because the investors are very much up to speed about that credit. And they've spoken to management in some shape of form in the last three months. That's often the case. And finally, I think the funding teams that we work with at our clients in the bank space tend to be a little bit more sophisticated, a little bit more knowledgeable because they have issued typically multiple times a year in the investment-grade bond market and they may also be active in other markets. So they have a better sense of how the process works and hence the process can be a lot more efficient from that perspective. And nowadays, yesterday, I noticed the deals were priced by one o'clock. They were announced around eight o'clock and it's done by one of. I've never seen that. What is going on with this whole speed of syndication? It's getting faster and faster. It's like, why didn't you just launch the date and price of ten, though? Yeah, it's a very good observation. And I think it's purposeful. The primary reason why we've seen transactions move quicker through the market is to avoid our clients being in the market for an extended period of time because of the volatility and the volatile environment that we live in. With interest rates moving, five, six basis points on any given day that can impact sentiment, can impact a man. So to the extent that we can get our clients in the market and priced sooner, that benefits everybody. How are we able to do that? I think there's some structural shifts that have happened in the marketplace specifically related to technology improvements over the course of the last several years. I'll give you two examples. The first is we have developed a technology that allows us to connect our transactions to investors back-order systems directly. A lot of the pain points that our clients used to have is that they would have to manually enter into their OMS every transaction that was being announced in the market. Now that information gets fed directly from the sell side to the buy side. So it takes a pain point away and makes the process more efficient for the investors. On the sell side, as you know, many of our transactions have multiple active book runners on the deal. The coordination that the active book runners need to have is paramount because we need to be on the same page in order to execute our transaction efficiently. I remember when I started my career or in Syndicate, we used to have hour long phone calls. We would go through line by line, each investors demand an allocation and that would take several hours on a regular transaction. Wow. So that's like a lot of line items, huh? Typically our deals have north of 100 line items in any individual truck. And that used to happen manually. Now it's all automated and we can share effectively that the order books within the active book on our group much more efficiently. And the final thing is we've seen evolution of the way the bond market works. We've seen that our clients, our issuer clients are more comfortable determining and setting the final pricing, whether it be a spread or a coupon earlier in the process. If you recall again, five years ago we were living in an era where after initial price stock was put out, the next step was a guidance, which was defined as plus minus five basis points. So there was still a possibility that the level could change at the next step. We've skipped that and now our our guidances are typically a number. It is set in stone and that is that is a level taken or leave it. And in some cases, if this clarity on the size that the client is looking to achieve, we'll skip that process and go straight to launch. We'll set the size and price by 12, 12, 30 Eastern and look to price again, as you said, in the 1 to 2 PM hour. So it's become much more efficient and I'm sure you've noticed during our peak periods in January and September where you see tremendous amounts of issuance from domestic and international clients, there have been numerous days where we have north of 20 or 25 individual transactions on screens. Would have been possible if it weren't for all of these structural and technology improvements that I just talked about. So Pranav, I know I'm like really stretching the time a bit. I'm thank you very much for hanging on with us. But what was your experience during the COVID crisis? I'm like, that was manic, right? Like we had $1.8 trillion from March. It began from March. What was your kind of experience then? The technology was not as great as it is now, I guess. Yeah. Luckily, I think during that time frame, the technology was good enough where a lot of things that I was telling you about we could actually achieve. But I think what was the most challenging part of executing transactions in that time frame was just a separation. Right. Just because we were, for the most part, working from home and it wasn't just that it was a syndicate desk maybe working from home, but it was that the traders were working from home and the bankers were working from home. And it's connectivity that is required across the bank and across sales and trading and the primary origination team that is critical to make sure that the transaction is well placed and trades well in the secondary market. So I think it was more about keeping communication lines open and clear in order to make sure that everybody's on the same page. I think it was probably the most challenging aspect. But during COVID, given the pace and volume of activity, we did see some of the shifts that I talked about in terms of moving to a single point guidance versus area to keep the process quite efficient for both the bankers, but importantly for our investor clients who need to make quick decisions right now if they're sticking in a deal or not. But the water and experience to have, yeah, that is fantastic. So what does your advice for graduates who are looking to join this line of business? How do they become pernau gupta? Well, let me, let me, let me preface that by asking is, are you, is, do you consider your business a growth business given the, right, the surge in, in issuance? Is there, you know, can we draw a straight line between opportunities and in your business with the growth and issuance just as a background of what Shanks has? Yeah, no, Bruce, it's, it's, look, I hope so. I hope, I think the answer is yes for the time being and we hope that's the case. And I think there's clearly fundamental shifts in the US and global economy that should keep the capital markets humming for quite some time. And I think the advice for, for new graduates is, look, we, and I think every, every bank on the street is looking for talented people to join us, to support us. I think the, the, the one big question that maybe the students have and, and concern that they have is the impact of, of AI and something that we're all kind of learning as, as we go. It's something that we are working to adopt. I've been using it. And I think it's, the, the important thing that I've learned is that it's, it's a supplement to what I do. It is not replacing what I do, but it is supplemental and it's making me a better banker. It's making me more efficient. And I think that's the lesson learned. I think we can help our clients. Actually, we can help more of our clients with the same time that we have given the efficiencies that we can develop through AI. So my, my recommendation to, to new graduates is to keep at it. And we want, we want to see them and talk to them and, as clearly, plenty of roles for, a junior talent to enter this space. And I think there's a lot of opportunities Bruce to your point as we look forward. So there's still enough of a human element in, uh, 100%, syndication and sales and everything that, AI is not going to pull the road on any of these. And, and, and you know this Bruce, being a trader, it is a relationship business and relationships matter. So yes, we can optimize and, and automate some of the more operational parts of the, the process, but having a conversation with a client, whether it be on the issuer side or the investor side, that is what is going to help determine where transaction clears. So, uh, most of my day is spent on the phone, um, talking to, to humans and, and, and, and talking to them about their price and sensitivity and their views and valuation. Not something I think is not going to go away anytime soon. But thank you very much again, uh, uh, front of that's all we have time for, but, uh, it's, it was wonderful. The conversation was terrific. Yeah. We learned a lot today. So thank you very much. I appreciate your time. Thank you very much. It's a pleasure. And, and thank you all for listening to us. Subscribe to credit matters on YouTube, Spotify, Apple or wherever you get your podcasts and tune in next week, where we have another great special guest. We wanted to see real time reports and market data. You can request a free trial of IGM services. The link is in the show notes. Thank you again. Have a nice weekend. Thank you, Brenna. Thank you. We're weekend, everybody. Thank you. Thanks.