As with all great stories and cycles — they begin and end somewhere. Years of history, plot twists, and rotating protagonists have made the credit markets a dynamic and multi-faceted segment of the broader market ecosystem. The pulse of the financial system is deeply rooted in credit, a reality we so poignantly saw in March 2020. As we head into the fourth quarter of 2021, almost 20 months into a global pandemic that sent ripples and shockwaves through the global macroeconomic footprint, we believe it is important to address how the credit markets continue to transform and where we believe they are headed. But in order to do that, we need to revisit credit's roots, fundamental characteristics, and how they have shifted over time. Akin to Ian Fleming's 1953 novel Casino Royale, the prequel to what would become the internationally recognized James Bond series, we view the third quarter as an homage to how James Bond truly became 007, and how the history of credit informs the future of credit amidst an ever-evolving backdrop.
We believe one of the biggest key takeaways of this market is the fact that the composition of the credit market has been evolving, drastically, for the last 15 years and we are now starting to see the unambiguous effects taking form through increased concentration of constraints and overall less flexibility. Just as James Bond is not truly agent 007 without the unity, tools, and shared intelligence of his partnership with M, Q, and the MI6 team; we believe investors, now more than ever, need connectivity to succeed as the market has moved to become more fragmented and siloed. We will elaborate on this analysis later on.