BBB securities: a reach for yield with long-term repercussions?

29/11/2018

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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

These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.

Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

The information in this article does not qualify as an investment recommendation.

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