The Weekly Brief
27-01-2025
Thought of the week
Investment grade (IG) credit spreads have remained resilient despite recent volatility in government bond markets. With spreads at historically tight levels, the additional compensation available for taking on credit risk is lower than many investors would like. This may lead some to wait for a more attractive valuation entry point - yet provided economic growth remains solid, these investors could be waiting for a while. Historically, global IG spreads have tended to trade at the tighter end of their range, spending 70% of the time since 2000 below 150 basis points. Corporate fundamentals are robust, so absent a major change in overall risk sentiment, spreads are likely to remain tight. We believe that investors can therefore feel confident in stepping out into high quality credit to capture the additional income available.
Global IG spreads could remain tight for a while
% of time spent in spread range since 2000
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