Sector Weighting Views ― November 2018
Fundamental credit risk has been thrust back into investor focus with the ongoing saga at General Electric (GE: Baa1/BBB+). The situation has led a +30 bps move in the IG Index since early October, with spreads hitting their widest level in two years, capping a -3.7% total return YTD for Corporates. Investors have spent much of the past several weeks rationalizing the risks in their corporate bond portfolios, taking extra care to identify credits that appear particularly over-levered for their current ratings and/or risk compensation levels (i.e. spreads).