Barclays_US_Credit_Alpha_The_show_goes_on

This document is intended for institutional investors and is not subject to all of theindependence and disclosure standards applicable to debt research reports prepared for retailinvestors under U.S. FINRA Rule 2242. Barclays trades the securities covered in this report for itsown account and on a discretionary basis on behalf of certain clients. Such trading interestsmay be contrary to the recommendations offered in this report.Please see analyst certifications and important disclosures beginning on page 43.US Credit AlphaThe show goes onThis week, we analyze fundamental trends in middle-marketdirect lending, discuss the macro implications of newinsurance solvency rules in Japan, highlight our 2026 risingstar and fallen angel outlook, and examine the relationshipbetween HYG and CDX.HY in derivatives. US Credit AlphaOverview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Private credit is capturing investors' attention, but systemic concerns are still contained. Inpublic markets, we remain constructive into year-end barring a macro shock, as technicals aresupportive, the Fed is cutting, and earnings and the economy are holding up.US FocusPrivate credit and BDCs: Taking fundamental cues amid uncertainty. . . 5Given elevated uncertainty about private credit and BDCs, we analyze fundamental trendswithin the middle-market direct lending landscape.US FocusMacro implications of new insurance solvency rules in Japan. . . . . . . . 15Upcoming ESR regulation for Japan's life insurers has driven changes in their portfolioinvestment and capital management, including offshore reinsurance utilization. The currentregulatory backdrop suggests their superlong JGB demand remains capped despite higheryields.US Investment Grade and High YieldRising star and fallen angel 2026 outlook: Breathing life into the HYmarket. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Fallen angels are outpacing rising stars in 2025, largely driven by a few idiosyncratic situations.In 2026, we expect this trend to accelerate, with $70-90bn of fallen angels, driven once again bya few large-cap stacks, and $15-35bn of rising stars. FICC ResearchCredit Strategy24 October 2025SIGNATUREBradley Rogoff, CFA+1 212 412 7921bradley.rogoff@barclays.comBCI, USDominique Toublan+1 212 412 3841dominique.toublan@barclays.comBCI, USCompleted: 23-Oct-25, 21:30 GMTReleased: 24-Oct-25, 10:30 GMTRestricted - ExternalUS Credit Derivatives and MacroBuy HYG and buy CDX.HY protection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39We recommend going long HYG and buying CDX.HY protection to position for a reversal of theHYG spread underperformance so far in October.24 October 20252Barclays | US Credit Alpha: The show goes onUS Credit AlphaOverviewPrivate credit is capturing investors' attention, but systemicconcerns are still contained. In public markets, we remainconst