By SNW Asset Management via Iris.xyz
Last Thursday the Federal Reserve published confirmation of a trend we have been seeing for a few quarters, that is, corporate America is taking on marginally less debt and leverage could be moderating. This trend is practically un-American, as corporate leverage has been ticking up for decades!
Moderating leverage is great for corporate bond investors and is one of the reasons why we still like investment grade corporate bonds this late in the credit cycle. In addition to moderating leverage, corporate bonds are benefiting from higher corporate earnings, very high levels of technical demand (as central banks keep interest rates low) and credit spreads that continue to tighten yet are still relatively attractive compared to other fixed income options. We call it the credit Indian summer–great while it lasts.
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