Bond Markets Update

The UBS Bond Markets report advocates for a 'quality carry' strategy focused on 2-7 year corporate bonds from defensive issuers like SocGen and IHG. Despite geopolitical tensions in the Middle East, credit spreads remain steady, supported by resilient earnings and historically elevated yields.

Key Takeaways

• 1.Focus on 'quality carry' by investing in 2-7 year corporate bonds from defensive, high-quality issuers as spreads return to pre-crisis levels.
• 2.Credit markets remain resilient despite Middle East geopolitical tensions and supply pressures, with many segments trading below previous crisis levels.
• 3.Carnival is identified as a high-conviction 'rising star' candidate likely to return to Investment Grade (IG) status due to strong deleveraging and pricing power.

Table of Contents

• Credit markets steady
• Value for selective investors
• Focus on quality carry
• Key recommendation changes
• Recommendations
• Key stories
• Issuers in our coverage universe
• Company comments
• UBS CIO risk views
• UBS CIO valuation views
• Sell recommendations
• Issuer valuation views

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