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B. G., Opalesque Geneva:

This first quarter was a strong but volatile quarter for credit markets, according to Gapstow, a New York City-based investment adviser that focuses on alternative credit. Gapstow has just published its Q1 2023 performance report, which covers sixteen alternative credit strategies across three types of investment vehicles: hedge funds, interval funds, and public funds (BDCs, mortgage REITs, and closed-end funds).

This quarter, credit markets were highly volatile, with a rally in January, an interest rate spike in February, a banking crisis in mid-March, and another rally during the last week of the quarter.

Interest rates declined despite Fed tightening by two 25-basis point increments. The yield on 10-year US Treasuries finished Q1 at 3.47% (down 0.41% during the quarter).

Spreads tightened. US high-yield bond spreads finished Q1 down 18 basis points (bps) at 470 bps. Yields finished at 8.43%, down 40 bps. The declining rates and the tightening spreads led to strong returns for high-yield bonds (+3.7 %) and leveraged loans (+3.3%).

Gapstow's credit hedge fund composite performance index is estimated to be up 1.3% and the credit interval fund index is up 2.4%.

While the public fund composite index gained 3.4%, "commercial real estate REIT share prices continued to decline,......................

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