Investors are again interested in US corporate loan, and you?
2022.11.21 11:15
Investors are again interested in US corporate loan, and you?
Budrigannews.com – Fund managers told the Reuters Global Markets Forum (GMF) that after the steep declines that occurred in 2022, investors are increasingly interested in U.S. corporate credit because of its attractive valuations and yields.
“As investors return to credit, we are at the start of a rotation.Salim Ramji, BlackRock’s global head of exchange-traded funds (ETFs) and index investments, stated, “The curve has repriced credit to attractive levels with the rapid move in front-end rates.”
After losing 20% and 14%, respectively, this year, the iShares iBoxx Investment Grade Corporate Bond ETF and the iShares High Yield Corporate Bond ETF are on track for quarterly gains of more than 3% in the fourth quarter.
M&G Investments’ chief investment officer for public fixed income, Jim Leaviss, stated, “We don’t know exactly when the peak in inflation will be, but I think that’s not a million miles away.”
“The entry level you get by buying investment-grade credit in the (United States) looks really attractive if we’re at this turning point.”
Ramji stated that corporate credit has become more appealing to investors seeking income after years of low interest rates due to the rise in bond yields, which move in opposite directions to prices.
The ICE’s (NYSE) yield spread:The BofA U.S. Corporate Index, which measures the premium investors pay to hold corporate bonds rather than safe-haven U.S. Treasuries, has decreased from 171 basis points in October, its highest level in more than two years, to 145 basis points today.
Leaviss noted that corporate bond issuers appeared relatively well-positioned to withstand higher borrowing costs as default rates were still low, and Ramji also believes the Fed will be near the end of its hiking cycle.
“There’s good things happening wherever you look in bond markets at the moment,” Leaviss stated, “where we’ve been short risk across bond portfolios, we’ve added risk back in.”
