Companies sold the second-largest quarterly issuance of corporate bonds in the U.S. over the first three months of the year as exchange traded fund investors jumped into fixed-income assets in response to rocky growth and volatile action in equities.
Highly rated corporate firms sold $317 billion in bonds over the first quarter, the most since the first quarter of 2009, the Wall Street Journal reports.
Investment-grade U.S. corporate debt experienced total returns, including price appreciation and interest payments, of 2.9% over the first quarter while junk-rated corporate bonds returned 3.0%. In comparison, the S&P 500 Index was up 1.8% over the first three months of the year. [Bond ETFs: The New Black]
“There are massive potential macroeconomic issues that this market has powered through,” Daniel Botoff, managing director and head of fixed-income syndicate for the Americas at UBS, said in the article. “This market has really been resilient.”
Year-to-date, the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEArca: LQD) has increased 2.8%, iShares iBoxx $ High Yield Corporate Bond ETF (NYSEArca: HYG) gained 2.8% and SPDR Barclays High Yield Bond ETF (NYSEArca: JNK) rose 2.9%. [Corporate Bond ETFs Capturing Investors’ Attention]
Tony Rodriguez, co-head of fixed income at Nuveen Asset Management, also argus that high-yield credit is “still attractive,” compared to historical levels, and are a “very solid investment for the individual out there, relative to taking equity risk or sitting in cash.”