Has credit reached a tipping point?

In the wake of volatility in March sparked by a sell-off in Chinese equities and US subprime mortgage woes, we ask five analysts whether the credit cycle has reached a tipping point

Jim Reid, Head of fundamental credit strategy, Deutsche Bank, London

The problem for credit investors in deciphering recent moves is that their origins are far removed from credit fundamentals. Company fundamentals will not be the main driver of spreads until the economic/default cycle turns and the need and ability to borrow at the right price are important again. The default rate remains close to decade lows but it's a lagging indicator and high-yield spreads are probably tighter than 10 years