Where next for investment grade corporate bonds?

Howard Cunningham, portfolio manager within the fixed income team at Newton Investment Management, says although credit spreads are now lower, investors should not dismiss corporate bonds.

In the mid-1980s, the slogan 'Where's the beef?' (borrowed from a US hamburger chain commercial), became associated with the US election primaries. Democratic contenders Walter Mondale and Gary Hart slugged it out over a number of weeks, with the former questioning the substance of the latter's economic policies. Investors in long-dated investment grade bonds may wonder the same about the economics of corporate debt currently. Credit spreads and government bond yields are both vital ingredients in evaluating corporate bonds. An increase in either has the potential to leave a sour taste. ...