Quantifying the Yield Based Bid in Corporate Credit

US pensions and insurers are poised to increase their USD corporate credit allocations due to attractive all-in yields and record pension funded status, providing a floor for tight spreads.

Key Takeaways

• 1.While corporate credit spreads are tight by historical standards, all-in yields remain attractive (near 5-6%), sustaining a 'yield-based' bid from institutional investors.
• 2.US corporate pension funded ratios are at their highest level since 2007 (107.8%), creating a catalyst for de-risking into high-quality corporate credit via glide paths.
• 3.The US insurance industry saw its largest annual asset increase since 2021 (6.7%) in 2025, with book yields currently trailing available market yields, incentivizing credit deployment.

Table of Contents

• Quantifying the 'Yield-Based' Bid in Corporate Credit
• Pensions: Improvements in funded ratios point to higher fixed income allocations
• Insurers: Book yields should benefit from deploying into corporate credit
• TRADE IDEAS

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