Further fueling the rise in the corporate bond market, supply and demand fundamentals are supporting the forward momentum. Deutsche Bank AG analysts have also pointed out that mutual funds have acquired $275 billion worth of bonds sold by companies with relatively strong balance sheets in 2015 or far outstripping the net supply of new issues, Bloomberg reports.
“The $275 billion increase in mutual funds’ credit holdings was twice the level of credit supply last year,” Deutsche analysts led by Dominic Konstam, Deutsche’s global head of rates research, said in a research note.
Rob Elson, a Bloomberg strategist, also noted that money managers’ allocation to corporate debt hit a fresh all-time high last week at 36.3% of portfolios, compared to 19.1% in 1999.
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iShares iBoxx $ Investment Grade Corporate Bond ETF