Since late March, US investment grade corporate bonds have recovered approximately 80% of their Covid-driven spread widening. Corporate bonds spreads now sit at about their ten year average of 150 bps over Treasuries, which to some investors appears extremely expensive given the fall in economic growth. The BMO Multi-Asset Solutions Team increased exposure to corporate bonds in April and despite the spread tightening still maintains an overweight position. Central bank policy underpins this view.
Implied OAS of US Corporate Bonds (%) Since July 2015
Implied OAS of US Corporate Bonds (%) Since March 23, 2020
This is not intended to serve as a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect our judgment at this date and are subject to change. Information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy. This presentation may contain forward-looking statements. “Forward-looking statements,” can be identified by the use of forward-looking terminology such as “may”, “should”, “expect”, “anticipate”, “outlook”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof, or variations thereon, or other comparable terminology. Investors are cautioned not to place undue reliance on such statements, as actual results could differ materially due to various risks and uncertainties. This publication is prepared for general information only. This material does not constitute investment advice and is not intended as an endorsement of any specific investment. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investment involves risk. Market conditions and trends will fluctuate. The value of an investment as well as income associated with investments may rise or fall. Accordingly, investors may receive back less than originally invested.