“It could be that Santa came early this year and we started that Santa rally a bit early,” says Jose Aguilar, head of European credit at BlackRock, regarding the European high-yield bond market. Aguilar, who leads the leveraged finance business and oversees the investment-grade team at the world’s largest asset manager ($15 trillion AUM) sits down with host Lisa Lee on the latest episode of Credit Exchange.

Discussing the recent turmoil in the European high-yield bond market attributed to hedge fund selling, Aguilar says that at the moment, things seem to have stabilised – “markets seem to imply that the worst is over” – while acknowledging the technical picture has changed “dramatically” in just a couple of weeks. Aguilar explains there was a significant drawdown, and that was created by the need for some of these funds to de-gross and deleverage. But there’s still plenty of opportunities.

Aguilar also discusses the AI trade, noting that AI is here to stay. “We need that compute capacity, and we will get it one way or another,” he says. “When there is so much money at stake, capitalism will find a way to allocate those resources.”

He also discusses BlackRock’s actively-managed fixed income ETFs in Europe.