Monday, August 30, 2010

Is the Low Quality Rally in Corporates Over?

Bloomberg details:

Returns on U.S. investment-grade corporate bonds are pulling ahead of junk-rated debt as credit investors turn to borrowers likely to weather a slowing economy.

Investment-grade bonds are up 9.7 percent this year, topping the 8.5 percent for speculative-grade, the biggest outperformance since credit markets seized up in 2008.

Yields on investment-grade bonds average about 4.71 percentage points less than junk, compared with 3.76 percentage points in April.
Performance by Rating

Source: Barclays Capital

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