Investors are increasingly eyeing US corporate credit offering attractive valuations and yields after steep declines in 2022, fund managers told the Reuters Global Markets Forum (GMF).
“We are at the beginning of a rotation as investors come back into credit. With the rapid move in front-end rates, the curve has repriced credit to attractive levels,” said Salim Ramji, global head of exchange-traded funds (ETF) and index investments at BlackRock.
iShares iBoxx Investment Grade Corporate Bond ETF and iShares High Yield Corporate Bond ETF are on track for quarterly gains of more than 3 percent in the fourth quarter after falling 20 percent and 14 percent respectively this year.
“We don’t know exactly when the peak in inflation will be but I think that’s not a million miles away,” said Jim Leaviss, chief investment officer for public fixed income at M&G Investments.
“If we’re at this turning point then the entry level you get by buying investment-grade credit in the (United) States looks really attractive.”
The jump in bond yields, which move inversely to prices, has also made corporate credit more attractive to investors looking for income after years of low interest rates, Ramji said. – Reuters
