Corporate Bonds: IG Downgrade to HY and BBB Share of U.S. IG Market This chart highlights the resilience of BBB-rated bonds. BofA believes that there is little risk that IG ratings will fall to junk status in the next recession. Image: BofA Global Research
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
U.S. Corporate Bond Market Risk It is different this time. Since the 2008 regulations change, corporate bond market-risk-taking has moved from banks to investors in mutual funds. Image: Swedbank Research
Cumulative Fund Flows: Global Equities and Global Government & Corporate Bonds $339 billion in inflows to bond funds globally, and $208 billion in outflows from global equity funds in 2019, as investors fear a global recession is on the horizon. Image: BofA Merrill Lynch
Global Corporate Bond Sales Companies sold a record amount of bonds in September. Yield-seeking investors were served up $434bn of new corporate bonds globally. Image: Financial Times
Dividend Yield vs. Corporate Bond Yield This chart shows that dividend yields of European companies appear more attractive than corporate bond yields. Image: Goldman Sachs Global Investment Research
Negative Yielding European Corporate Bonds Now, €1.1 trillion of European corporate bonds yield are below zero: exactly half of the European high-grade credit market. Image: BofA Merrill Lynch
Total Negative Yielding Corporate Bonds Outstanding Negative-yielding corporate debt passed $1 trillion in market value. Investors face significant risk should rates start to rise. Image: Bianco Research
Value of U.S. Corporate Bonds by Rating Since the Great Recession, the U.S. corporate bond debt rated ‘BBB’ exceeds $3 trillion. If the U.S. economy goes wrong, this is bad news for investors. Image: The Wall Street Journal
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.…