Key Observations
For the month of January 2019, the yield on the 5-year US Treasury Note ended at 2.44%, 7 basis points lower from the previous month. The Bloomberg Barclays US High Yield Index tightened by 103 basis points to 4.23% over Treasuries. The BB Rated Corporate Credit Spread decreased by 90 basis points to 2.64%. The B Rated Corporate Credit Spreads tightened by 113 basis points to 4.18%. The CCC Rated Corporate Credit Spread decreased by 146 basis points to 8.43%.
There are many reasons that an investor may employ a professional bond manager. One of the most important considerations when working with a professional bond manager is its access to institutional trading desks and its ability to purchase bonds at a fair or attractive price. Many investors are aware that equities are exchange traded, which allows investors to easily buy or sell equity securities with relatively low transaction costs.
It may no longer be true that “bigger is better” when picking a corporate bond manager. After the financial crisis, reforms to cut global risks have changed some basic features of the corporate bond market. Bond market volumes are healthy and exceed levels of 2007, but the average bond transaction is 40% smaller today.
Key Observations
For the month of December 2018, the yield on the 5-year US Treasury Note ended at 2.51%, 30 basis points lower from the previous month. The Bloomberg Barclays US High Yield Index widened by 108 basis points to 5.26% over Treasuries. The BB Rated Corporate Credit Spread increased by 79 basis points to 3.54%. The B Rated Corporate Credit Spreads widened by 115 basis points to 5.31%. The CCC Rated Corporate Credit Spread increased by 180 basis points to 9.89%.
Key Observations
For the month of November 2018, the yield on the 10-year US Treasury Note ended at 2.99%, 15 basis points lower from the previous month. The Bloomberg Barclays US Corporate Index widened by 19 basis points to 1.37% over Treasuries. The A Rated Corporate Credit Spread increased by 13 basis points to 1.09%. The BBB Rated Corporate Credit Spreads widened by 25 basis points to 1.77%.