Harley Bassman

Hyperscaler debt is not a bond-market crisis because Meta, Google, Amazon, Microsoft and Oracle have core cash-generating businesses that can service debt even if rates rise another 50-200bp. AI competition may hurt equity holders, but he views the bonds as money good.

Bassman likes financial leverage in high-quality front-end income vehicles because Fed cuts should steepen the curve, bringing borrowing costs below investment yields. This includes high-quality BDCs buying first-lien top-of-capital-structure loans at discounts, agency mortgage REITs like Annaly whose coupons look solid as front-end rates fall, municipal closed-end funds trading at 8-12% discounts whose yields should push them toward NAV, and products using 5x two-year and 3x seven-year Treasury futures. He cites ARCC as the biggest and best BDC and notes it has become more interesting as credit concerns have pushed prices down.

Bassman likes financial leverage in high-quality front-end income vehicles because Fed cuts should steepen the curve, bringing borrowing costs below investment yields. This includes high-quality BDCs buying first-lien top-of-capital-structure loans at discounts, agency mortgage REITs like Annaly whose coupons look solid as front-end rates fall, municipal closed-end funds trading at 8-12% discounts whose yields should push them toward NAV, and products using 5x two-year and 3x seven-year Treasury futures. He cites ARCC as the biggest and best BDC and notes it has become more interesting as credit concerns have pushed prices down.