2026 MIC – Credit Panel Finds Calm in Historic Spreads but Eyes Rate Volatility and AI Issuance Surge

At the 2026 Morningstar Investment Conference, one of the more closely watched debates in fixed income: investment grade credit spreads have been running at historical tights, and a panel of senior practitioners gathered to explain why, what could finally break them, and how the AI buildout is reshaping the corporate bond market. Moderated by Max Curtin, Senior Analyst for Fixed Income Strategies at Morningstar, the session featured Ryan Brist, Deputy CIO at Western Asset Management, a Franklin Templeton subsidiary; Ivor Schucking, a fixed income veteran with more than 34 years of research experience and formerly Head of Investment Grade Credit Research at Vanguard; and Pramod Atluri, Fixed Income Portfolio Manager at Capital Group, who has more than 22 years of investment industry experience. All three shared the same core thesis: the fundamental backdrop for credit is as strong as any of them have seen, spreads are expensive but explainable, and the primary risks lie not in a deteriorating corporate sector but in rate volatility and a potential inflection in AI spending.

Six Inches of Ice or Two

Brist opened by acknowledging the obvious: spreads are tight, equities are elevated, and geopolitical risk is visible. But he pushed back on the idea that tightness alone signals fragility. Drawing on an ice analogy, he asked whether investors are naively skating on thin ice, or whether the ice is really six or eight inches thick. His answer was that the ice is deep. Revenues at large corporations are running up more than 10% year over year, he said, and earnings growth last quarter came in close to 20%. M&A activity is active across every major sector, and the corporate backdrop is not just good but great. Geopolitical shocks, while dramatic in headlines, had proven to be near-term technical events rather than fundamental dislocations. The most recent conflict, he pointed out, went from a four-to-six-week risk to a four-to-six-month backdrop and still registered as little more than a nudge in credit spreads.