(Bloomberg) -- Investors are getting the least compensation in six years for leaving the safety of US Treasuries and taking on the risk of emerging-market...
-- Investors are getting the least compensation in six years for leaving the safety of US Treasuries and taking on the risk of emerging-market corporate bonds .A Bloomberg index of dollar-denominated EM company debt has rallied since October, reaching the highest level since February 2022. That’s sent its yield premium over Treasuries down to 216 basis points, less than half of the spread seen as recently as 2022.
“The thin spreads have been driven by factors including limited supply, relatively strong fundamentals and muted election risks,” said Codrington. “Alongside these factors, we have seen a positive outlook for most EM sovereign credits, which have resulted in limited sovereign-driven EM corporate rating downgrades.”
“As I started my career in 2000, I used to learn to compare spreads to risks,” Varga said in an interview from Vienna, where he’s a senior portfolio manager. “Now I see markets where negative news is ignored, leverage goes up, and nobody really cares. Any type of liquidity premium is getting priced out. People just buy absolute yields, and do not care about fundamentals.”
For now, those improved fundamentals, along with momentum and technical dynamics, appear to be more important to investors than the thinning spreads. American automakers and their Chinese rivals are heading in different directions. Able to produce far more cars than they can sell in China, Chinese companies like BYD are entering markets all over the world. Their global expansion comes as major U.S. carmakers - whose once-lucrative China sales are withering - have withdrawn from promising markets such as India, Indonesia and Thailand to focus on their North American base.
There are approximately 72 million baby boomers alive in the United States, as of 2019. Many of those boomers are currently "house poor," meaning they've bought a home that prohibits them from...3 SGX Dividend Stocks Offering Yields From 5.8% To 7.5%
Corporate Bonds Investors US Treasuries Technical Factors Emerging-Market Companies Luke Codrington
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