"Money makes the world go round"… all around the world.




December 30, 2008

Best Bond Deals

Medium term valuations in credit appear very compelling. However, credit markets have yet to establish a clear bottom as policy makers struggle to contain the economic fallout from rampant de-leveraging, still falling house prices and limited demand for distressed assets.

  • Overweight Investment Grade, Underweight High Yield. Deleveraging and high yields in a world of low nominal returns produce attractive risk-adjusted and relative return prospects for corporate bonds. We favour investment-grade credits at present but would look to extend into high-yield as the economic and financial environment stabilises.
  • Underweight BBB cyclicals. Tight credit conditions and funding pressures are likely to weigh on levered companies that are vulnerable to a cyclical economic slowdown.
  • Overweight more defensive sectors. Stable cash flows and limited financing requirements should continue to benefit Consumer Product, Healthcare, Defence, Telecom, Utility and Energy companies.
  • Modest Financial sector overweight. Durable and comprehensive government support will likely result in substantial issuance, but also makes the sector more defensive relative to non-financials.
  • Take advantage of the new issue calendar. In the early stages of a credit cycle, the strongest companies usually issue debt on favourable terms for investors. Additionally, the wide basis of cash bonds over CDS offers an added benefit.

2 Responses to “Best Bond Deals”

  1. A. HALIM Says:

    A. HALIM…

    Finally, after reading several articles about term investment grade bond your one clarified some things i was confused about them….

  2. Randall Chittam Says:

    Im glad I discovered this weblog, I couldnt find any information on this topic prior to. Also manage a website and if you are ever interested in doing some guest writing for me please feel free to let me know, im always look for people to check out my weblog. Please stop by and leave a comment sometime!

Leave a Reply

Copyright © 2015 What the Finance
Economics and Finance blog

Best Deals | Stock Market Watch | Business Finance | Investment Ideas | Business Guide | News Wire | Business Directory