UBS maintains an 'Attractive' rating on Investment Grade (IG) bonds, driven by high yields (5% USD/3.7% EUR) and resilient corporate fundamentals. They recommend shifting excess cash into medium-duration IG credit for durable income.
Key Takeaways
- 1.UBS holds an 'Attractive' view on investment grade bonds, citing appealing outright yields of 5.0% in USD and 3.7% in EUR.
- 2.Corporate fundamentals remain solid with median net leverage for US IG issuers stable at 2.1x and EBITDA growth accelerating to 8.9% y/y.
- 3.Despite robust supply (USD 881bn YTD), strong investor demand continues, fueled by fund inflows and appealing yields relative to cash.
Table of Contents
- Central scenario
- Global Asset Class Preference Attractive
- Upside scenario
- Quick resolution
- Downside scenario
- Sustained oil supply disruption
- Global asset class preferences definitions
- Appendix
- Risk Information
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Authors
Antoine GeillerFrederick MellorsCarolina Corvalan
Securities
AMZNGOOGLORCLMETABloomberg US Int. Corp.
Themes
Yield OptimizationCorporate Fundamental ResilienceInflation and Central Bank Hawkishness
Regions
North AmericaEuropeUnited StatesChina