Monarch’s Sklar Sees Stress Emerging From ‘Squeezed’ US Consumer

The blow-ups of Tricolor Holdings and First Brands Group have sparked debates about underwriting and due diligence practices, but the bigger problem in the corporate credit is coming from pain points in the US economy, according to Adam Sklar, co-chief investment officer at Monarch Alternative Capital LP.

“High-yield spreads are at their 95th percentile, but there’s a lot beneath the surface to look at,” Sklar said on Bloomberg Intelligence’s Credit Edge podcast. “There’s a huge amount of dispersion within the credit markets.”

Higher interest rates in recent years have started to put stress on some levered companies, and many ...