Barings: Subprime not to blame for increased LBO risk

Spread widening in corporate credit and leveraged debt has been wrongly attributed to the fallout from the US subprime mortgage market, according to Baring Asset Management.

Toby Nangle, London-based fixed-income investment manager at the firm, said that while not wholly unrelated, the US subprime mortgage market was not the driver for a slowdown in corporate financing and leveraged debt.

“A lot of people have been linking subprime chaos to corporate credit chaos and the fact that spreads have been widening on the corporate credit and the leveraged loan side. The catalyst may well have been subprime but the drivers are, I think, quite separate,” he commented.

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