Credit outlook: Halo, is it me you're looking for?

As Lionel Richie once asked, “is it me you’re looking for?” In today’s credit markets, the answer is increasingly HALO – Hard Assets, Low Obsolescence. These are companies anchored in physical infrastructure such as pipelines, power grids, toll roads, and mining assets.

Their value lies in real, hard to replicate assets, and their revenue models are far less vulnerable to the disruptive force of artificial intelligence. In a world where AI is simultaneously boosting productivity for some and destroying business models for others, HALO companies offer a place to hide.

The first quarter of 2026 delivered an unusual combination of shocks. The outbreak of the Gulf War and the near closure of the Strait of Hormuz removed 15-20% of global oil and LNG supply, creating the risk of a renewed inflationary impulse and exerting disproportionate pressure on Asian and European growth.

At the same time, the AI investment boom continues at high speed, but the strain is increasingly visible in private credit, where highly leveraged, AI-exposed software companies are showing clear signs of stress. Public credit markets have remained surprisingly resilient through all of this, but we question whether they should be.