Avoiding fallen angels in the credit sector

clock • 2 min read

The bull/bear debate in credit markets in 2020, is whether we face an early 1980s-type bear market or a 2008 valuation scenario.

Investment grade spreads at +400bps and high yield at +1100bps are cyclically attractive. Policymakers have stepped in. The US Federal Reserve has gone beyond 2008 policies already, buying corporate bonds alongside the European Central Bank (ECB) and Bank of England. With its €750bn PEPP, the ECB has regained control of the Italian BTP curve. Fiscal spending and government promises are soaring. Illiquidity premia in US Treasuries and MBS spreads may have peaked, helping higher quality credit. Industry Voice: Applying ESG analysis to corporate bonds US corporations have record hi...

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