UBS Credit Strategy: Attractive Carry Yields in Bonds

Key Takeaways

• 1.Lock in high carry yields across medium tenor corporate bonds and high-quality sovereign bonds up to 10 years, where positive 12-month total returns are highly probable.
• 2.Corporate credit spreads remain tight and resilient; selectivity is crucial, favoring quality A/BBB rated issuers, national champion banks, and selective hybrids over structurally challenged sectors like autos and chemicals.
• 3.Sovereign debt affordability is under pressure from higher-for-longer yields, notably in France, the US, and Japan, which could prompt central bank or policy interventions.

Table of Contents

• Central bank pricing is driven by inflation fear and robust economic growth
• Corporate bonds: In a tight market, selectivity is everything
• Credit performance: Despite the many headlines, credit spreads barely blinked
• French sovereign outlook further strained by higher cost of debt
• Sovereign debt affordability strained by higher yields

Report data

Performance by segment (OAS change, total return and excess return over government bonds in %) — as of September 25, 2026.