Viewpoints Investment Grade Credit: Be Actively Aware of BBB Bonds Room for error is narrowing for investments in the lower tiers of the U.S. investment grade corporate bond market.
The U.S. corporate bond market is a massive, diverse asset class that has seen decades of significant growth. In the past four years alone, the market has increased from around $4 trillion to $5.8 trillion. This growth, however, has been accompanied by a steady decrease in overall credit quality. Investors should watch this trend closely, especially when weighing the potential risks and benefits of passive versus active management in their credit portfolios. Crucially, the share of the U.S. investment grade (IG) nonfinancial bond market that is rated BBB (i.e., the lowest credit rating still considered IG) has increased to 48% in 2017 from around 25% in the 1990s. Drilling down into the riskiest part of the BBB market segment, the universe of low BBB rated bonds is now bigger than that of all BB rated bonds (i.e., the highest-rated speculative grade bonds) combined. (Read our investor education piece on corporate bonds for a quick refresher on credit ratings, issuers, credit spreads, risks and reasons to invest.) To Read the Full Article Log In Or Register
Strategy Spotlight BOND: Going Active in Core Bond ETFs An active approach may tap opportunities unavailable to passive fixed income ETF investors.
Blog Credit Where Credit Is Due: Four Common Misconceptions in Public and Private Credit Markets Heightened market volatility has led to misconceptions about credit, in our view. We dispel four of them here.
Viewpoints Hotel Market in a Post‑COVID World Hotels have recovered from the depths of the pandemic, but markets continue to evolve and the recovery has been uneven.