We’re on the cusp of profound change in Europe, says Tristram Leach, co-head of European credit at Apollo Global Management, in the latest “Credit Exchange” podcast. Leach spoke with Lisa Lee, the managing editor at Creditflux, on how the degree of policy uncertainty at a global level has driven a fundamental re-evaluation of how Europe needs to conduct itself.

Germany, in particular, is looking to turn on the fiscal taps, and set to spend dramatically more than it has historically on defence and infrastructure, providing an enormous fiscal boost to Europe as a whole. Only a few weeks ago, the prevailing sentiment on Europe was that it was squarely in the crosshairs of a trade war, with nothing much that could be done. Now, Europe appears to be responding to what it perceives as threats, in ways that are potentially going to change the investing landscape very dramatically, according to Leach. Those changes mean a new paradigm for Europe, and a new investing environment. The economic outlook has shifted to one of higher rates, higher inflation, and potentially higher growth.

While public credit markets remain relatively tight, there is an attractive premium to be found in private credit, Leach advises. Apollo Favours private over public in both the sub-investment grade universe, and in the investment grade credit space, where investors can pick up a 150-200bp premium over their liquid counterparts.