Credit remains attractive in this heightened risk environment
Following the relentless tightening of monetary policy in 2022 and into 2023, all-in yields for investment grade credit have risen materially, on higher government yields and wider credit spreads, placing credit in a positive spotlight. However, the degree and the pace of interest rate hikes was bound to place stress on the financial system adjusted to a low-rate environment. This quarters’ U.S and European bank weakness is one of the signs that higher real and nominal rates are posing financial risks.
Ecaterina Bigos and Frank Olszewski delve into US investment grade credit exploring what recent market events may mean for this asset class and the factors we think are important in order to build a successful US Investment Grade portfolio.