Bloomberg Surveillance Sep 21, 2026
With Meghan Robson, Head of US Credit Strategy at BNP Paribas
BNP Paribas expects two more rate rises, one in December and one in January. Its own modeling says corporate credit does not really start to struggle until the fifth.
The bank has still dropped its bullish view on credit, and not because borrowers look weaker. Earnings growth for investment-grade issuers is running in double digits and the ratio of their debt to those earnings has fallen. What changed is how many bonds there are.
"We're no longer bullish. What changed is bond abundance in corporate bond markets."
Meghan Robson runs US credit strategy at BNP Paribas, and the call she was defending on air is her own desk's downgrade of a market that has so far absorbed a large rise in real yields without widening.
The full segment is covered here so you can skip it.
Here are the 7 calls that matter.
Key Takeaways
Higher term premium is a worldwide phenomenon, and credit is the asset class that has not repriced for it yet
Another 25 to 50 basis points of real yield is where she thinks it starts to bite
The bearish case is supply, not credit quality — the AI build-out has ended the shortage of bonds to buy
Two of the large hyperscalers are rated BBB, one notch from losing investment-grade status
It takes five rate hikes before credit really struggles, and BNP expects two
Investment-grade interest coverage is 10 times earnings to interest costs
Loans beat high yield in a rising-rate market, because the coupon floats up instead of the price falling
The loan market is also the one still pricing AI disruption of software borrowers
A gradual rise is survivable; a fast one is not — the risk she names is velocity, not level
1. Term Premium Everywhere
Tom Keene opened on France, where he said the France-Germany spread had just touched a full percentage point, and asked whether the tension there is spreading to other countries. Robson widened it out immediately.
The rise in term premium is not a French story
Yeah, at BNP, we're definitely seeing the phenomenon of higher term premium, higher yields.
Meghan Robson
She credited her colleague Guneet Dhingra with the call on a higher US 10-year Treasury yield this year, and said he sees the risk of it going higher still.
2. Why Spreads Held
The part she called fascinating is what has not happened. A corporate bond spread is the extra yield a company pays over a Treasury of the same maturity, and spreads have barely moved through the whole rise in yields.
Rising real yields normally hurt credit, and this time they have not
Normally, this rise in real yields really starts to weigh on credit.
Meghan Robson
Her caution is that the market is now near the level where it would. Another 25 to 50 basis points, she said, could start to hurt.
Keene stopped to explain the mechanism to the audience: there is a yield, and there is the difference between that yield and the yield on full-faith-and-credit government debt, which is the spread. Yields have moved up and prices have moved down with them, but the difference between corporate yields and government yields has not moved. That, he said, is what people mean when they say spreads have not moved.
3. The End Of Scarcity
Paul Sweeney asked what changed to make BNP drop its bullish credit view. Robson's answer was about the supply of bonds rather than the health of the borrowers.
Last year investors competed for paper; that is over
So if you look at 2025, we were in this environment where investors were competing to find bonds that they could buy.
Meghan Robson
The AI build-out is what ended it. The hyperscalers are borrowing to fund capital spending and so are other sectors, and she does not think the wave has crested.
More supply raises the floor under spreads
And we think this is just the beginning. So looking ahead, we think the supply continues and that it starts to raise the floor on spreads and will be a source of volatility looking ahead.
Meghan Robson
4. Quality Is Not The Issue
Sweeney pushed on whether the new issues are as high quality as they look. Robson separated the two halves of the question: the view change is about technicals, meaning supply, not about fundamentals. Investment-grade borrowers are growing earnings in double digits, and the leverage measure the market watches, which sets an issuer's debt against its earnings, has actually fallen because the earnings side has grown faster.
Two of the big hyperscalers sit one notch above high yield
We also have two large ones that are BBB rated. So that means they're at just right on the cusp of being between IG and potentially high yield.
Meghan Robson
Those two, she said, are the interesting ones to watch from a credit perspective.
5. Two More Hikes
Asked what she made of the Fed's 25-basis-point move that week, Robson noted the absence of forward guidance and said the chair stayed firm on inflation. Her own forecast has more to come.
December and January
We're still expecting two more hikes, one in December and then one in January.
Meghan Robson
Then the number that matters for her asset class.
Credit does not break until the fifth hike
I think for the numbers that we've run for credit, we think that you'd need to see five hikes before credit really started to struggle.
Meghan Robson
Her view is that policy is not restrictive yet and is only now getting closer to it. With nominal GDP growth above 6%, she said, the market can absorb another few hikes.
Keene followed up on nominal GDP directly, asking whether BNP expects it to stay elevated at 5% or more. Robson said that is the forecast, and gave the reason: higher rates have hit housing, but other sectors are thriving, and the transmission of higher rates to the broad economy has weakened.
6. Loans Beat High Yield
Sweeney read from her notes that BNP prefers leveraged loans to high-yield bonds, and asked her to explain the difference between the two. Both are borrowings by lower-rated issuers, double-B and below. High yield is fixed-rate debt; leveraged loans are floating-rate and usually secured. If rates rise, the price of a fixed-rate bond falls and eats the total return, while a floating-rate loan's coupon rises with the Fed. That is why money flows into the loan market when rates are going up, and she said that is happening now.
The loan market is the one still pricing AI disruption
It has an elevated software exposure. And it's one of the few markets where it's still pricing in a lot of AI disruption.
Meghan Robson
Sweeney asked whether borrowers are showing it yet. They are not.
No evidence yet in software earnings
We're not seeing fundamental evidence that software earnings have started to slow from all of this new AI. And so we think it's a slow motion theme.
Meghan Robson
7. A Shock, Not A Grind
Keene asked whether listeners should be studying shocks, having first asked whether Robson studied with Jordi Galí at Brown and explained to the audience that "stochastic," as in the dynamic stochastic general equilibrium models Richard Clarida works in, is the academic word for shocks. She had not, and she answered the market question.
Velocity is the risk, not the level
Although rates have risen materially this year, if we were to see a sharp rise, one with velocity and rates volatility amounting more to a shock, I think that could cause some indigestion.
Meghan Robson
Asked whether a gradual path leaves credit fine out to three hikes, she agreed, and gave the cushion.
Investment-grade borrowers cover their interest 10 times over
If you look at an interest coverage for investment grade companies, it's 10 times right now.
Meghan Robson
Three hikes, on that arithmetic, is something those issuers absorb.
Bonus Insights
The rest of the hour
Robson took the second segment of the program. The same hour carried Torsten Slok of Apollo Global Management on the AI-driven economy, Alexis Crow of PwC on the AI trade, Dana Telsey of Telsey Advisory Group on retail and Bruce Wolfe of Alight on retirement income.
The academics
Keene name-checked Jordi Galí and Richard Clarida on the way into his shocks question, and glossed the jargon himself: stochastic means shocks.
Robson's bottom line is that the reason to be less positive on corporate credit is the amount of new paper the AI build-out is creating rather than anything wrong with the borrowers, and that the rate path only becomes a credit problem if it arrives fast rather than if it goes far.
Products, Companies & Tools Mentioned
BNP Paribas (Her firm, which has moved off a bullish credit view on supply rather than fundamentals and expects hikes in December and January)
The Federal Reserve (Raised 25 basis points that week with no forward guidance; she said the chair stayed firm on inflation)
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