Barclays_US_Credit_Alpha_A_very_rare_turn_of_events

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 54.US Credit AlphaA very rare turn of eventsThis week, we discuss hyperscaler financing needs, refreshour investment grade macro spread model, discuss trends inleveraged finance recovery rates, provide an outlook for CDS-cash basis across US/EU, and update our CMBS supply anddemand forecast for 2026.  US Credit AlphaOverview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Investment grade cash excess returns are negative for the past one and three months while highyield excess returns are positive - only the fifth time in 25 years that such a combination hasoccurred. We think IG can grind tighter into year-end as issuance slows, led by BBBs.US Focus(A)I owe you: Framing hyperscaler financing . . . . . . . . . . . . . . . . . . . . . . . . 6Hyperscaler issuance has overwhelmed the market, and the growth of private/off balance sheetfinancing is also adding pressure. Issuance is likely to slow from here, but the direction of supplyis higher for longer, as cash flow is no longer the sole funding mechanism.US Investment GradeModeling the macro. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Our macro model suggests the index is trading at fair value. It is most sensitive to SLOOS andfund flows, and we provide a sensitivity table to these inputs. Despite tight valuations, spreadback-ups of +25bp are common historically and provide buying opportunities.US High Yield and Leveraged LoansVery varied recoveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Distressed exchanges continue to grow in popularity, making recovery rate analyses morenuanced. Using a longer-term look-back period, recoveries from distressed exchanges arestarting to converge with, or move higher than, bankruptcy-driven recoveries.FICC ResearchCredit Strategy14 November 2025SIGNATUREBradley Rogoff, CFA+1 212 412 7921bradley.rogoff@barclays.comBCI, USDominique Toublan+1 212 412 3841dominique.toublan@barclays.comBCI, USCompleted: 13-Nov-25, 23:29 GMT Released: 14-Nov-25, 11:30 GMTRestricted - ExternalCredit Derivatives and Macro2026 CDS-cash basis outlook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35In 2025, European and US HY CDS outperformed cash, while CDX.IG outperformed marginallyand Main lagged. For 2026, we expect CDS to deliver stronger risk-adjusted returns than cashacross regions. For relative value,