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FIXED INCOME

Investment Grade Credit – taking stock

March 13, 2024

Investment grade (IG) credit markets have rallied strongly over the past year, particularly since the US Federal Reserve signalled in November its intention to start cutting rates. As a result, while yields for the IG credit index remain high, and well above long term averages, credit spreads are approaching historically tight levels.

 

Despite the tight spreads, yields remain high with levels of dispersion elevated at a country, sector and individual bond level.

 

Meanwhile, fundamentals continue to point to IG companies being in good health and demand for the asset class remains robust. These factors mean that, in our view, IG credit looks well placed to continue to deliver results with many of the best opportunities now likely to found at individual company level. 

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