Explore long bonds
See the U.S. long bond market’s components and credit quality as we build the map from the ground up
Source: Barclays POINT data ©2019 Barclays Capital Inc. Used with permission. POINT is a registered trademark of Barclays Capital Inc. Data in market value terms as of 3/31/19. Split by index, then credit quality, then sector.
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Long government/credit supply (USD billions)
Rapid growth: At $3.5 trillion, the U.S. long bond market has more than tripled in size since the global financial crisis.
More credit: As the market has grown, its composition has changed. U.S. government bonds made up more than two-thirds of the market in the mid-1990s; now credit accounts for more than half of the investable universe.
Weaker quality: As the credit component of the market has expanded, quality has weakened. Bonds rated triple-B account for more than half of long credit bonds, more than double the level in the late 1980s.
Pockets of scarcity: Despite the market’s sharp growth, some portions are comparatively small. For instance, although AA-rated corporate bonds play a critical role in liability measurement, their limited depth and breadth will often require sponsors to add other types of bonds to their hedging toolkit.
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Bond ratings, which typically range from AAA/Aaa (highest) to D (lowest), are assigned by credit rating agencies such as Standard & Poor's, Moody's and/or Fitch, as an indication of an issuer's creditworthiness.
“Long STRIPS” refers to U.S. Treasury STRIPS with maturities of at least 10 years, which are not part of the Bloomberg U.S. Long Government/Credit index. While depicted as a subset of long Treasury in order to offer a broad sense of the relative size of an important component of the universe of physical hedging instruments (and to avoid potentially double-counting stripped Treasuries), note that STRIPS are not in fact a component or subset of Treasuries. Note also that because Long STRIPS contain no cash flows before 10 years (while long Treasury, on the other hand, does implicitly incorporate shorter-dated cash flows in the form of coupon payments), there is some measure of inconsistency worth noting (e.g., arguably, technically nine-year coupon STRIPS could be included here, to the extent that they are created from coupons of long Treasuries).
“Sovereign, etc.” refers to the aggregated-for-convenience sectors of sovereign (the largest sector included herein), foreign agencies (which have similar quality distribution though skewed somewhat higher), and supranational (a relatively small sector which in the long end is entirely AAA-rated bonds). The other noncorporate credit sector, shown distinctly, is described as “local authorities,” which is technically the Class 2 description for the foreign local governments sector.
Before 6/30/2000, many credits that today would be categorized as long corporate were instead a component of the long noncorporate credit universe, with the legacy sector name foreign corporations. These securities have been included in the “Sovereign, etc.” category for periods prior to 6/30/2000.
Before 6/30/2000, many credits that today would be categorized in the foreign local governments sector (which we call “local authorities”) were instead identified by the legacy sector name Canadian. These securities have been included under “local authorities” in our historic figures.
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