Richard Turnill – Blackrock
Moving Up in Credit Quality
Summary: Investment grade corporate bonds typically outperform their high yield counterparts when uncertainty raises. Recently, however, that has not been the case. Yield spreads have widened versus Treasuries, putting downward pressure on prices. Additionally, issuance has rapidly escalated amid a surge in mergers and acquisitions (M&A) activity. There is less need to stretch for yield when dollar-based investors can get above-inflation returns in short-term “risk-free” debt.