Further acceleration in AI debt issuance has the potential to steer demand away from government bonds, according to Amundi, Europe’s largest asset manager. “At some point it could have a crowding effect, but we are not there yet,” Gregoire Pesques, the firm’s chief investment officer for global fixed income, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Tolu Alamutu in the latest Credit Edge podcast. “It’s a risk that we monitor,” says Pesques, whose company has $2.7 trillion under management. They also discuss value in corporate debt relative to government bonds, how G7 countries are behaving more like emerging markets and Amundi’s concerns about central bank independence.<br><br>See omnystudio.com/listener for privacy information.

Europe's Largest Asset Manager Warns of AI Debt Deluge Crowding Out

The Credit Edge by Bloomberg Intelligence

# Full Transcript

**Podcast:** The Credit Edge by Bloomberg Intelligence

## Participants

- **Francine Lacroix** (Bloomberg)
- **James Crombie** (Bloomberg)
- **Tolu Alamutu** (Bloomberg Intelligence)
- **Greg Pesk** (Amundi)

## Transcript

I'm Francine Lacroix, an award-winning journalist, and I've got a new podcast, Leaders with Francine Lacroix from Bloomberg Podcasts. I've interviewed everyone from heads of state to fashion icons about the news of the moment. But I've always been curious, who are these people as leaders? I don't think there's one right way to be a leader. Make decisions. A poor decision is always better than no decision. Listen to new episodes every other Monday. Follow Leaders with Francine Lacroix wherever you get your podcasts.

Hello and welcome to The Credit Edge, a weekly markets podcast. My name is James Crombie. I'm a senior editor at Bloomberg. And I'm Tolu Alamutu, a senior analyst at Bloomberg Intelligence. And this week we are very pleased to welcome Greg Pesk, who is the CIO for Global Fixed Income at Amundi. How are you, Greg, today? I'm very fine. And you? I'm not too bad enjoying the weather here. Of course. Of course.

Anyway, Amundi is Europe's largest asset manager with two and a half trillion dollars worth under management. And for now at least, Amundi is the only European name in the global top 10. Amundi has been called Europe's answer to BlackRock. And Greg has been at Amundi basically since its very beginning. He was head of credit at SockGen Asset Management prior to that.

And he's got extensive experience clearly in credit. So he is definitely the go-to person to go to for all things fixed income. Thanks for being here. I just want to start with the AI and tech story, which is really dominating the headlines. This week we have SpaceX out with a huge debut bond deal rated investment grade. And the hyperscalers are rapidly changing the face of the corporate bond market. But as a large investor, Greg, do you just have to buy this now? What's the impact?

Well, first, there are a lot of, I think, as always, a lot of concern about AI, the rapid growth of CapEx, the issuance, the buyback. And a lot of, you know, parallels are being done with the TMT, you know, story from 98 and the liberalization of telcos and so on. I think we are in a completely different world.

Back in the 20s, you know, 70% of the high-end market was TMT. Here we are with issuers that most of them are investment grade or even AA. And, you know, we have very few AA in the corporate bond market. So I welcome, in fact, this new issuance. It will increase, in fact, the quality. It will increase the number of issuance. It will increase the liquidity of the market, your ability to do relative value.

They are issuing on the whole curve, on different currencies. So you can do cross-currency, you know, type of relative value. So I think it's a very good news. I'm not really worried about the impact on the interim of issuance. Historically...

Europe's Largest Asset Manager Warns of AI Debt Deluge Crowding Out

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Europe's Largest Asset Manager Warns of AI Debt Deluge Crowding Out

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.