A case of déjà vu

A case of déjà vu? The peak of the GFC was less than six years ago so the pain suffered should still be fresh in the memories of credit investors. Investors could not make the same mistakes again. Or could they? This paper aims to highlight the increasing risk in credit assets, while not identical to those prior to the GFC, bear a very strong resemblance. The finger of blame is often pointed at the US sub-prime mortgage market. However the basic conditions that impacted credit markets leading into the GFC were: 1) Monetary policy was too accommodative for an extended timeframe and as a result credit was cheap and freely available; 2) Complexity and leverage was added to investment products to satisfy investor yield requirements; and 3) Investors ignored valuations and fundamentals because 'it was different this time'. All of these factors are evident in credit markets today. (VIEW LINK)


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Established in 1961, Schroders in Australia is a wholly owned subsidiary of UK-listed Schroders plc. Based in Sydney, the business manages assets for institutional and wholesale clients across Australian equities, fixed income and multi-asset and...

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