Credit: a historic opportunity

While default rates in the fixed interest sector are expected to remain elevated over the next 12-24 months, valuations more than sufficiently compensate investors for the future economic environment and expected increases in defaults

Fixed-income markets experienced a setback in February, after the tentative signs of improvement recorded in December and January, with almost every sector of the fixed-income market recording negative returns during the month. The ongoing crisis has affected all the non-government-bond sectors over the past two years, with little reflection of underlying fundamentals. There is a profitable opportunity for investors with a medium- to long-term horizon, as current valuations in bond markets are discounting both a poor economy and terrible liquidity conditions for some time. Investors should ...