Credit managers are being urged to tilt toward diversification as volatility spikes, KKR told investors on Tuesday. Partner and co‑head of credit and markets Christopher Sheldon warned that the ongoing Iran conflict is fuelling market turbulence. “This is not the time to reach for risk,” he said in a Bloomberg Television interview, emphasizing prudence in new allocations.

Since the Middle East flare‑up intensified in early 2026, equity indices have swung more than 12% on a weekly basis, prompting lenders to reassess balance‑sheet exposure. KKR’s credit team, which manages roughly $120 billion, has been trimming high‑yield positions while adding sovereign and investment‑grade assets to cushion potential drawdowns.

Investors taking heed can expect tighter spreads on risk‑ier issuers as capital migrates to safer buckets. For corporates, the call for diversification may translate into higher borrowing costs unless they can demonstrate resilience against geopolitical shocks. KKR’s stance signals that credit markets will remain selective until volatility eases.

The guidance aligns with KKR’s broader risk‑management framework, which has recently incorporated scenario‑analysis for oil price shocks and sanctions risk. By championing diversification, the firm hopes to preserve capital returns for its limited partners while navigating an environment where geopolitical events can swiftly reshape credit curves.