{Locale} {Investor Type]
You are entering the {Locale} {Investor Type} Site.

For UK Professional Investors only:
This information and the terms of use are subject to change at any time without notice. The contents of this website are intended for residents and citizens of the United Kingdom and should not be relied on by residents or citizens of other jurisdictions. By clicking the “Proceed” button below, you are agreeing to the Terms & Conditions of use.

Decline
Barrow Hanley Global Investors is a brand name that refers to Barrow, Hanley, Mewhinney & Strauss, LLC.
© 2025 Barrow, Hanley, Mewhinney & Strauss, LLC. All Rights Reserved.
United States (US)
Institutional
For US Institutional Investors only:

The information on this website is intended for institutional investors and consultants to institutional investors.  It is published for informational purposes only and does not purport to address the financial objectives, situation, or specific needs of any investor.  It does not constitute an offer for products or services and should not be construed as an offer to sell or a solicitation of an offer to buy to any persons who are prohibited from receiving such information under the laws applicable to their place of citizenship, domicile, or residence.  If you do not qualify as an institutional investor or consultant, the information shown on this site may not be relevant or appropriate for you.

This site is not intended for non-US persons.

For US Intermediary Investors only:

The information on this website is intended for intermediary investors. It is published for informational purposes only and does not purport to address the financial objectives, situation, or specific needs of any investor.  It does not constitute an offer for products or services and should not be construed as an offer to sell or a solicitation of an offer to buy to any persons who are prohibited from receiving such information under the laws applicable to their place of citizenship, domicile, or residence.  If you do not qualify as an institutional investor or consultant, the information shown on this site may not be relevant or appropriate for you.

This site is not intended for non-US persons.

For UK Professional Investors only:

This information and the terms of use are subject to change at any time without notice. The contents of this website are intended for residents and citizens of the United Kingdom and should not be relied on by residents or citizens of other jurisdictions. By clicking the “Proceed” button below, you are agreeing to the Terms & Conditions of use.

For UK Private Investors only:

This information and the terms of use are subject to change at any time without notice. The contents of this website are intended for residents and citizens of the United Kingdom and should not be relied on by residents or citizens of other jurisdictions. By clicking the “Proceed” button below, you are agreeing to the Terms & Conditions of use.

For EU Professional Investors only:

This information and the terms of use are subject to change at any time without notice. The contents of this website are intended for residents and citizens of the European Union and should not be relied on by residents or citizens of other jurisdictions. By clicking the “Proceed” button above, you are agreeing to the Terms & Conditions of use.

For EU Private Investors only:

This information and the terms of use are subject to change at any time without notice. The contents of this website are intended for residents and citizens of the European Union and should not be relied on by residents or citizens of other jurisdictions. By clicking the “Proceed” button above, you are agreeing to the Terms & Conditions of use.

For CH Private Investors only:

This information and the terms of use are subject to change at any time without notice. The contents of this website are intended for residents and citizens of Switzerland and should not be relied on by residents or citizens of other jurisdictions. By clicking the “Proceed” button above, you are agreeing to the Terms & Conditions of use.

For CH Professional Investors only:

This information and the terms of use are subject to change at any time without notice. The contents of this website are intended for residents and citizens of Switzerland and should not be relied on by residents or citizens of other jurisdictions. By clicking the “Proceed” button below, you are agreeing to the Terms & Conditions of use.

For SG Professional Investors only:

This information and the terms of use are subject to change at any time without notice. The contents of this website are intended for residents and citizens of Singapore and should not be relied on by residents or citizens of other jurisdictions. By clicking the “Proceed” button below, you are agreeing to the Terms & Conditions of use.

For SG Private Investors only:

This information and the terms of use are subject to change at any time without notice. The contents of this website are intended for residents and citizens of Singapore and should not be relied on by residents or citizens of other jurisdictions. By clicking the “Proceed” button below, you are agreeing to the Terms & Conditions of use.

Proceed
Barrow Hanley Global Investors is a brand name that refers to Barrow, Hanley, Mewhinney & Strauss, LLC.
© 2020 Barrow, Hanley, Mewhinney & Strauss, LLC. All Rights Reserved.
About
Value Equity
Fixed Income
Investment Strategies
News & InsightsClient LoginContact
Menu

Update

Barrow Hanley Credit Partners September 2025 Monthly Update

In this post:

10.24.2025
Follow us:

Executive Summary

  • The Fed cut rates 25bps, which helped all asset classes perform well in September.
  • Economic activity continues to look supportive within labor markets.
  • Loan market outperformance depends on avoiding borrowers with weaknesses similar to those that sank auto-parts maker First Brands in September.

Market Recap

September was a strong month for risk assets as the Fed cut rates 25 bps and indicated more cuts to come.  The aligns with what many strategists see as a cyclical acceleration, with leading economic indicators trending higher. The resulting momentum lifted the S&P 500 return 3.65%, bringing year-to-date returns to just under 15%.  In fact, the S&P 500 climbed to all-time highs during the month.  Asian equity markets—Japan, Korea, Taiwan, and China—also climbed to all-time highs, with all those markets posting double-digit returns in the third quarter.  Gold also reached an all-time high, with a 12% return in the month.  

10-year rates declined 21 bps to a low of 4.02% just before the Fed rate cut, before bouncing higher to finish the month at 4.15%, down 8 bps in September.  Duration assets performed well during the month, with the 10-year Treasury bonds returning 0.94%.  Investment grade bonds were up 1.43% with lower rates and spread compression.  High Yield was up 0.76% due to spread compression.  Loans were up 0.48% as the Fed commentary about future rate cuts reduced the forward curve by another ~5bps.

Economic activity continues to outpace consensus expectations.  Easing financial conditions, resilient growth, and fiscal and monetary support continue to strengthen the bid for financial assets.  Economic and trade policy uncertainty is subsiding.  The labor market remains the key uncertainty driving the Fed’s recent and expected rate cuts. Hiring and wage growth are slowing, suggesting conditions are easing after a long period of tightness. Unemployment is rising, and caution is increasing among employers and workers.  Labor markets were imbalanced before immigration policy shifted, particularly in industries sensitive to immigration.  Immigration policy is compressing the labor force, resulting in 1.5 million fewer foreign workers over the last few months.  Demographics is another well-known and frequently mentioned element that secularly influences the labor markets.   A growing labor force increases the economy’s potential GDP growth and has been an underpinning of US growth over the last 15 years.  A shrinking workforce can slow growth while pushing up costs as workers gain bargaining power.  Two-thirds of industries currently have more job openings than unemployed workers. Francois Trahan of The Macro Institute has highlighted that over the past few years, there have been more job openings than unemployed workers, a dynamic last seen in the 1960s.  Given these structural changes in the labor force, higher wages are probable, and could exert upward pressure on inflation, ultimately reversing the current cyclical slowdown in job creation.

High Yield

High Yield bonds returned 0.76% during the month due to spreads and yields declining 5bps to 6.73%.  Spreads ended at 299 bps, down from 304 bps to start the month.  Single-Bs led the ratings cohort returns up 0.81% as yields for Single-Bs declined 18bps from 6.93% to 6.75%.  Single-B spreads ended the month at 304bps down 16 bps.   BBs posted 0.79% return with just 2 bps of a decline in yield and spread.  CCCs were up 0.41% as yields were 1bps tighter at 11.78% but spreads widened by 8 bps to 814 bps.

Loans

Loans posted a relatively benign 0.48% return.  Spreads for Loans compressed 5bps to 451 bps while yields declined 3 bps to 7.82% The Fed commentary around future rate cuts for the rest of this year influenced the forward SOFR curve.  Rate expectations for the end of 2025 dropped to 3.66% from 3.76% or 10 bps, and the end of 2026 increased from 2.93% to 3.03%.  Loan prices declined 4 cents to $96.42.  Loans saw a similar dynamic as HY with Single-Bs outperforming up 0.61%, BBs up 0.51%, and CCC lagging with a 0.08% return.  

September ended up being an eventful period for a large loan issuer we have not owned, First Brands Group.  First Brands Group owns a large collection of auto aftermarket brands.  First Brands Group attempted to refinance its ~$6.0bn debt structure (loan-only structure) at par, but the deal was pulled in early August with investors allegedly concerned about the potential of unreported off-balance sheet working capital financing and other accounting issues.  The company said they would hire a Big Four Audit firm to perform a Quality-of-Earnings report.  News continued to come out in the weeks that followed, and First Brands Group filed multiple Special Purpose Vehicles for bankruptcy on September 24, 2025.  First Brands Group then filed for bankruptcy on September 28, 2025, with minimal cash left.

According to the bankruptcy documents filed so far, First Brands Group has $6.1bn of funded debt, $2.3bn in off-balance sheet debt obligations (excluding factored accounts receivable), and $800mm in unsecured supply chain financing liabilities.  The court filings also noted that a Special Committee is investigating whether receivables had been turned over to third-party factors upon receipt and whether receivables were factored more than once.  The filings also noted that inventory pledged to a SPV entity might have been commingled with the inventory of the First Brand Group debtors.  It is unclear if there are other issues with historical financial statements, as an investigation is ongoing.

The 1st lien loans traded down into the $30s from around $95 at the beginning of September.  The lender group is also injecting $1.1 billion of additional capital in the form of a debtor-in-possession loan.

We highlight this company because it will be an interesting case to follow and it highlights our investment process.  We have stated in these letters and in person that outperformance in the Loan market has come from avoiding potential problems.  We believe that avoiding the problems will lead to outperformance.  We continually passed on First Brands new issuance and secondary opportunities as we could not get comfortable with the margins the company was earning and the individual owner had limited information publicly available.  

CLOs

CLOs were large owners of First Brands.  This loan was a tough loss for CLOs that held it given prices went from 95 to 30 in a matter of a week, but ultimately it is a manageable problem for CLOs given concentration limitations.  The situation highlights what we have been telling investors: that chasing the highest cash-on-cash returns is not the ideal strategy.  Cash-on-cash returns should be balanced with the mitigation of par loss in order to maximize the return of CLO Equity over the life cycle of any given deal.

Returns as of September 30, 2025

Read More

ABOUT BARROW HANLEY GLOBAL INVESTORS

Barrow Hanley is a diversified investment management firm offering value-focused investment strategies spanning global equities and fixed income. Recognized as one of the few remaining firms dedicated exclusively to value investing, Barrow Hanley enjoys a boutique culture with a singular focus to assist clients in meeting their investment objectives. Today, Barrow  Hanley has approximately 100 employees, over half of which are investment professionals managing assets for our valued clients. Barrow Hanley stewards the capital of corporate, public, multi-employer pension plans, mutual funds, endowments and foundations, and sovereign wealth funds across North America, Europe, Asia, Australia and Africa. For further information, please visit www.barrowhanley.com.

General Disclosures:‍

All opinions included in this report constitute Barrow Hanley’s (BH) judgment as of the time of issuance of this report and are subject to change without notice. This report was prepared by Barrow Hanley with information it believes to be reliable. This report is for informational purposes only and is not intended to be an offer, solicitation, or recommendation with respect to the purchase or sale of any security, nor a recommendation of services supplied by any money management organization. Past perfor- mance is not indicative of future results. Barrow Hanley is a value-oriented investment manager, providing services to institutional clients.

Barrow Hanley Credit Partners® is a legally assumed name for the Alternative Credit investment team and investment strategies of Barrow Hanley Global Investors®, including Bank Loan Fixed Income, Collateralized Loan Obligations, and High Yield Fixed Income.

These investment summaries are provided for informational purposes only and should not be viewed as representative of all investments by the firm. This report includes certain “forward-looking statements” including, but not limited to, BH’s plans, projections, objectives, expectations, and intentions and other statements contained herein that are not historical facts as well as statements identified by words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “projects”, or words of similar meaning. Such statements and opinions contained are based on BH’s current beliefs or expectations and are subject to significant uncertainties and changes in circumstances, many beyond BH’s control. Actual results may differ materially from these expectations due to changes in global, political, economic, business, competitive, market, and regulatory factors. Additional information regarding the strategy is available upon request.‍

Index Disclosures:‍

Source: Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg’s licensors own all proprietary rights in the Bloomberg Indices. Neither Bloomberg nor Bloomberg’s licensors approves or endorses this materi- al, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.

Credit Suisse Index data is permissible for use by Barrow Hanley for client reporting and marketing purposes. This data is not permitted to be re-distributed.

Merrill Lynch index data referenced herein is the property of ICE Data Indices, LLC, its affiliates (“ICE Data”) and/or its Third Party Suppliers and has been licensed for use by Barrow Hanley Global Investors. ICE Data and its Third Party Suppliers accept no liability in connection with its use.

The S&P Indexes are a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and has been licensed for use by Barrow, Hanley, Mewhinney & Strauss. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Barrow, Hanley, Mewhinney & Strauss. It is not possible to invest directly in an index. Barrow, Hanley, Mewhinney & Strauss products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices does not make any representation or warranty, express or implied, to the owners of the Barrow, Hanley, Mewhinney & Strauss products or any member of the public regarding the advisability of investing in securities generally or in Barrow, Hanley, Mewhinney & Strauss products particularly or the ability of the S&P Indexes to track general market performance. Past performance of an index is not an indication or guarantee of future results. S&P Dow Jones Indices’ only relationship to Barrow, Hanley, Mewhinney & Strauss with respect to the S&P Indexes is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P Indexes is determined, composed and calculated by S&P Dow Jones Indices without regard to Barrow, Hanley, Mewhinney & Strauss or Barrow, Hanley, Mewhinney & Strauss products. S&P Dow Jones Indices have no obligation to take the needs of Barrow, Hanley, Mewhinney & Strauss or the owners of Barrow, Hanley, Mewhinney & Strauss products into consideration in determining, composing or calculating the S&P Indexes. S&P Dow Jones Indices are not responsible for and have not participated in the determination of the prices, and amount of Barrow, Hanley, Mewhinney & Strauss products or the timing of the issuance or sale of Barrow, Hanley, Mewhinney & Strauss products or in the determination or calculation of the equation by which Barrow, Hanley, Mewhinney & Strauss products is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices have no obligation or liability in connection with the administration, marketing or trading of Barrow, Hanley, Mewhinney & Strauss products. There is no assurance that investment products based on the S&P Indexes will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment or tax advisor. A tax advisor should be consulted to evaluate the impact of any tax-exempt securities on portfolios and the tax consequences of making any particular investment decision. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.‍

Index Disclosures (continued):‍

NEITHER S&P DOW JONES INDICES NOR THIRD PARTY LICENSOR GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE S&P INDEXES OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY BARROW, HANLEY, MEWHINNEY & STRAUSS, OWNERS OF THE BARROW, HANLEY, MEWHINNEY & STRAUSS PRODUCTS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P INDEXES OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBLITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND BARROW, HANLEY, MEWHINNEY & STRAUSS , OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. The presentation may contain confidential information and unauthorized use, disclosure, copying, dissemination or redistribution is strictly prohibited. This is a presentation of Barrow Hanley. Russell Investment Group is not responsible for the formatting or configuration of this material or for any inaccuracy in Barrow Hanley’s presentation thereof.

Please contact us for more information.

214.665.1900
contactus@barrowhanley.com

‍
Barrow Hanley Global Investors
2200 Ross Avenue
31st Floor Dallas, TX 75201
www.barrowhanley.com

10.24.2025
Follow us:

Market Recap

September was a strong month for risk assets as the Fed cut rates 25 bps and indicated more cuts to come.  The aligns with what many strategists see as a cyclical acceleration, with leading economic indicators trending higher. The resulting momentum lifted the S&P 500 return 3.65%, bringing year-to-date returns to just under 15%.  In fact, the S&P 500 climbed to all-time highs during the month.  Asian equity markets—Japan, Korea, Taiwan, and China—also climbed to all-time highs, with all those markets posting double-digit returns in the third quarter.  Gold also reached an all-time high, with a 12% return in the month.  

10-year rates declined 21 bps to a low of 4.02% just before the Fed rate cut, before bouncing higher to finish the month at 4.15%, down 8 bps in September.  Duration assets performed well during the month, with the 10-year Treasury bonds returning 0.94%.  Investment grade bonds were up 1.43% with lower rates and spread compression.  High Yield was up 0.76% due to spread compression.  Loans were up 0.48% as the Fed commentary about future rate cuts reduced the forward curve by another ~5bps.

Economic activity continues to outpace consensus expectations.  Easing financial conditions, resilient growth, and fiscal and monetary support continue to strengthen the bid for financial assets.  Economic and trade policy uncertainty is subsiding.  The labor market remains the key uncertainty driving the Fed’s recent and expected rate cuts. Hiring and wage growth are slowing, suggesting conditions are easing after a long period of tightness. Unemployment is rising, and caution is increasing among employers and workers.  Labor markets were imbalanced before immigration policy shifted, particularly in industries sensitive to immigration.  Immigration policy is compressing the labor force, resulting in 1.5 million fewer foreign workers over the last few months.  Demographics is another well-known and frequently mentioned element that secularly influences the labor markets.   A growing labor force increases the economy’s potential GDP growth and has been an underpinning of US growth over the last 15 years.  A shrinking workforce can slow growth while pushing up costs as workers gain bargaining power.  Two-thirds of industries currently have more job openings than unemployed workers. Francois Trahan of The Macro Institute has highlighted that over the past few years, there have been more job openings than unemployed workers, a dynamic last seen in the 1960s.  Given these structural changes in the labor force, higher wages are probable, and could exert upward pressure on inflation, ultimately reversing the current cyclical slowdown in job creation.

High Yield

High Yield bonds returned 0.76% during the month due to spreads and yields declining 5bps to 6.73%.  Spreads ended at 299 bps, down from 304 bps to start the month.  Single-Bs led the ratings cohort returns up 0.81% as yields for Single-Bs declined 18bps from 6.93% to 6.75%.  Single-B spreads ended the month at 304bps down 16 bps.   BBs posted 0.79% return with just 2 bps of a decline in yield and spread.  CCCs were up 0.41% as yields were 1bps tighter at 11.78% but spreads widened by 8 bps to 814 bps.

Loans

Loans posted a relatively benign 0.48% return.  Spreads for Loans compressed 5bps to 451 bps while yields declined 3 bps to 7.82% The Fed commentary around future rate cuts for the rest of this year influenced the forward SOFR curve.  Rate expectations for the end of 2025 dropped to 3.66% from 3.76% or 10 bps, and the end of 2026 increased from 2.93% to 3.03%.  Loan prices declined 4 cents to $96.42.  Loans saw a similar dynamic as HY with Single-Bs outperforming up 0.61%, BBs up 0.51%, and CCC lagging with a 0.08% return.  

September ended up being an eventful period for a large loan issuer we have not owned, First Brands Group.  First Brands Group owns a large collection of auto aftermarket brands.  First Brands Group attempted to refinance its ~$6.0bn debt structure (loan-only structure) at par, but the deal was pulled in early August with investors allegedly concerned about the potential of unreported off-balance sheet working capital financing and other accounting issues.  The company said they would hire a Big Four Audit firm to perform a Quality-of-Earnings report.  News continued to come out in the weeks that followed, and First Brands Group filed multiple Special Purpose Vehicles for bankruptcy on September 24, 2025.  First Brands Group then filed for bankruptcy on September 28, 2025, with minimal cash left.

According to the bankruptcy documents filed so far, First Brands Group has $6.1bn of funded debt, $2.3bn in off-balance sheet debt obligations (excluding factored accounts receivable), and $800mm in unsecured supply chain financing liabilities.  The court filings also noted that a Special Committee is investigating whether receivables had been turned over to third-party factors upon receipt and whether receivables were factored more than once.  The filings also noted that inventory pledged to a SPV entity might have been commingled with the inventory of the First Brand Group debtors.  It is unclear if there are other issues with historical financial statements, as an investigation is ongoing.

The 1st lien loans traded down into the $30s from around $95 at the beginning of September.  The lender group is also injecting $1.1 billion of additional capital in the form of a debtor-in-possession loan.

We highlight this company because it will be an interesting case to follow and it highlights our investment process.  We have stated in these letters and in person that outperformance in the Loan market has come from avoiding potential problems.  We believe that avoiding the problems will lead to outperformance.  We continually passed on First Brands new issuance and secondary opportunities as we could not get comfortable with the margins the company was earning and the individual owner had limited information publicly available.  

CLOs

CLOs were large owners of First Brands.  This loan was a tough loss for CLOs that held it given prices went from 95 to 30 in a matter of a week, but ultimately it is a manageable problem for CLOs given concentration limitations.  The situation highlights what we have been telling investors: that chasing the highest cash-on-cash returns is not the ideal strategy.  Cash-on-cash returns should be balanced with the mitigation of par loss in order to maximize the return of CLO Equity over the life cycle of any given deal.

Returns as of September 30, 2025

A longstanding history of competitive returns, a collegial environment, and a bespoke approach to client service yields a principled, proven partner.