Liquidity Premium: Investment Grade vs. High Yield Bonds The chart shows that the premium provided by illiquid IG and HY bonds has been drifting wider. Image: Goldman Sachs Global Investment Research
U.S. Share of Global Investment-Grade Fixed-Income Yield With negative yields in Europe and Japan, the U.S. now accounts for 95% of the positive investment-grade yield. Image: Legg Mason
U.S. Corporate Bond Ownership More than 25% of U.S. corporate bonds are held by insurance companies. Many investment grade investors are not allowed to hold junk-rated bonds. Any drop in the credit ratings could amplify the next recession. Image: NBF Economics and Strategy
The Performance of “Deflation Asset” vs. “Inflation Assets” Interesting chart showing the performance of “Deflation Asset” vs. “Inflation Assets” since 1960. “Deflation Asset”: Government Bonds, US Investment Grade, S&P 500, US Consumer Discretionary, Growth and US High Yield “Inflation Assets”: TIPS, EAFE, US Banks, Value and Cash Image: BofA Merrill Lynch
The U.S. Corporate Bond Debt Rated ‘BBB’ Exceeds $3 trillion The U.S. corporate bond debt rated ‘BBB’ exceeds $3 trillion. That’s 53% of investment-grade bonds in the United States. Any drop in the credit ratings could amplify the next recession: many investment grade investors own BBB-rated bonds, but are not allowed to hold junk-rated bonds.…
Share of Market Value in Bloomberg Barclays USD IG Since 1990, the amount of BBB-rated bonds has doubled. This is only one step away from junk bonds. Keep in mind that many investment grade investors own BBB-rated bonds, but they are not allowed to hold junk-rated bonds. So, any drop in the credit ratings could…
Leveraged loans pose risks as corporate debt increases A leveraged loan is debt issued by a company that has below investment grade credit ratings and a considerable amount of debt with high interest rates. In this video, Brian Cheung of Yahoo Finance, explains why leveraged loans pose risks as corporate debt increases.
U.S. Corporate Debt Maturity Wall This chart shows the massive wave of maturities faced by investment-grade and speculative-grade U.S. companies in coming years. Image: Oxford Economics
U.S. High Yield Bonds and Leverage Loans The pace of downgrades has accelerated in the U.S. leveraged loan market, despite declining interest rates. Image: Goldman Sachs Global Investment Research
BBB Debt by Sector in the U.S. By sector in the U.S., financial institutions have the largest amount of ‘BBB’ debt: $744 billion. That’s 53% of investment-grade bonds in the United States. You may also like “The U.S. Corporate Bond Debt Rated ‘BBB’ Exceeds $3 trillion.” Image: S&P Global Fixed Income Research