A Credit Resilience that Rewards the Selective Investor

Credit markets have shown notable resilience this year in some segments of the market.

Despite geopolitical tensions in the Middle East, concerns surrounding AI-related investment enthusiasm, questions over private credit, and episodes of market dispersion, there has been no real panic in the asset class. And that resilience is no accident: it reflects genuinely supportive fundamentals and demand

Fundamentals and flows remain steady

On fundamentals, many corporate opportunities remain in solid shape. Growth is modest, particularly in Europe, but leverage is well under control, and margins have held up better than many investors expected. The overall picture remains supportive, thanks to healthy issuers.

Financials look even stronger. Recent stress-test and quarterly reporting frameworks are highlighting the resilience of both US and European banks: they continue to benefit from high capital ratios, solid profitability and healthier balance sheets than in previous cycles.

*Figure 1. Source: RAM AI, data as of 30th June 2026.*

Flows are the second important pillar. Investor demand for credit has remained resilient, even during bouts of volatility. The reason is straightforward: investors are focusing on total return and carry. Yields remain attractive in absolute terms, even if spreads are no longer cheap.

That distinction matters. Tight spreads may make credit look expensive versus history, but the all-in yield can offer a potentially important source of return for investors willing to stay invested.

Carry is attractive, but captured selectively beyond beta

In this environment, it can be tempting to increase portfolio beta. Fundamentals are strong, flows are supportive, and volatility has been relatively contained. We would be careful with that approach.

Below the surface, dispersion remains high. The gap between higher-quality BB issuers and weaker CCC issuers remains wide, which is a sign that the market is rewarding resilient business models.

*Figure 2. Source; RAM AI, data as of 30th June 2026.*

‍Credit markets may be resilient at the index level, but they are increasingly selective at the issuer level.

That contributes to a good environment for active management. Investors should not take on more risk indiscriminately as dispersion creates both opportunities and traps. When credit spreads are compressed at the headline level, avoiding the wrong names can be just as important as finding the right ones.

Where we see value

In corporate credit, selectivity is essential, particularly in single-B issuers. Some companies in this part of the market can still offer attractive carry, but others are vulnerable to weaker growth, higher refinancing costs or deteriorating liquidity. The difference between ‘cheap’ and ‘distressed’ can become very thin.

In financials, we remain constructive. Strong capital positions and robust profitability give investors more room to take risk, including beyond the largest national champions. Select regional banks can offer attractive relative value, provided balance sheet quality and capital strength remain sound.

In structured credit, BBB and BB tranches are where we find interesting risk-reward balance. They provide access to attractive carry with a meaningful degree of protection in the capital structure. By contrast, tranches lower down remain under more pressure and require greater caution.

The bottom line: the opportunity is not simply in owning credit — it is in owning the right income-generating credit.

RAM Strata Credit fund Characteristics:

‍Current Yield in EUR and CHF: 4.9% in EUR / 2.6% in CHF**
‍Portfolio rating: BB+
Spread: 220 bps
AUM: 440 Mn

*Credit Rating: is a parameter used by banks and lending institutions to determine whether an applicant is deserving of the confidence necessary for the granting of a loan. This parameter makes it possible to measure the risk of consumer default and determine the economic conditions applicable to consumers. The highest rating is indicated by the letters: AAA. This is the indication of highest financial security. This is followed by: AA, A, BBB, BB, etc. The lowest credit rating corresponds to the letter C. This letter identifies a high risk of financial default and is a figure taken into great consideration by each lending institution.

**Portfolio yield as of 30 June 2026. The yield shown is indicative only and does not represent or guarantee future performance or distributions.

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