As investors seek higher returns following a long period of very low rates, issuers are taking advantage by issuing longer-term debt for lower-rated securities, notably in the BBB sector. In this video, Portfolio Managers Nick Maroutsos, Dan Siluk and Jason England discuss the risks presented by a large influx of BBB-rated securities. Questions covered include:

  • Are investors compensated for BBB risk?
  • Are there any recessionary signals?
  • How might BBB react in a risk-off environment?

Bond ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest).
2's and 10's spread is the difference in yield between 2-year Treasuries and 10-year Treasuries.
Basis point (bp) equals 1/100 of a percentage point. 1 bp = 0.01%, 100 bps = 1%.

Recorded November 2018