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Weekly Market Summary
Apr 27 to May 1, 2026
Extra Credit*
- Redemption requests at non-traded Business Development Companies (BDCs) are expected to peak in the second quarter after reaching record levels in Q1, according to Bank of America. Analysts anticipate further increases as advisors submit larger requests to compensate for prorated withdrawals in the first quarter, when most funds enforced 5% redemption caps. However, actual redemption activity likely peaked in Q1, as most funds are expected to continue adhering to these quarterly limits, effectively capping the amount of capital that can be withdrawn.
- Morningstar’s updated Medalist Ratings framework has been streamlined, with fewer components driving the final score. Ratings are now based on three core pillars, People, Process, and Parent, with a fee adjustment applied to reflect cost competitiveness relative to peers. For active funds, 70% of the rating is driven by the fundamental pillars and 30% by Price, while passive funds place greater emphasis on fees, with a 60/40 split. Each pillar is scored from +2 to -2, and the overall rating is calculated as a weighted average. Within active strategies, People and Process carry the most weight, while passive funds rely more heavily on Process.
- According to Morgan Stanley, AI infrastructure financing has been structured to address two core risks typical in high yield markets, namely cash flow uncertainty and refinancing risk. These deals are supported by long term contracted lease revenues directed into lockboxes to service debt, with bonds that amortize over the lease term, reducing refinancing needs. The firm believes AI infrastructure could become a transformative force in non-investment-grade credit, potentially growing into a $100 billion sector. This constructive view is reinforced by strong investor demand despite concerns around leverage and execution risk. Meridian Arc Holdco’s $5.7 billion five-year bond deal, the largest AI related high yield issuance to date, drew nearly $20 billion in orders, highlighting the market’s willingness to fund the expansion.
Morgan Stanley and Morningstar as of 4/29/2026.
Previous reports
*Source: Morningstar®, Bloomberg, Credit Suisse. OAS is Options Adjusted Spread. 4-year discount margin is used for spread for bank loans. Yield quoted is yield-to-worst or equivalent calculation. YTD Low / High for yields are based on end of week and not intraday movements. Indexes and sub-indexes: Investment-grade corporates represented by Bloomberg US Corporate Bond Index. High-yield bonds represented by Bloomberg US Corporate High Yield Index. Bank loans represented by Morningstar LSTA US leveraged Loan Index. The red and green arrows depicted under Yields, Option Adjusted Spreads, and Prices indicate a higher or lower value from the previous week.
Past performance does not guarantee future results. Index performance is not indicative of fund performance. Indexes are unmanaged and it is not possible to invest directly in an index.
Any discussion of individual companies is not intended as recommendation to buy, hold or sell securities issued by those companies. Aristotle Fund holdings can be found on the fund pages linked above.
Investors should consider a fund’s investment goal, risks, charges, and expenses carefully before investing. The prospectus and/or the applicable summary prospectus contain this and other information about the Fund and are available from AristotleFunds.com. The prospectus and/or summary prospectus should be read carefully before investing.
Investing involves risk. Principal loss is possible.
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