M&G's Jim Leaviss positive on corporate bonds

Corporate bond spreads now hugely overcompensate the true risk of default, according to M&G's Jim Lea...

Corporate bond spreads now hugely overcompensate the true risk of default, according to M&G's Jim Leaviss. Gilts enjoyed a rally yesterday buoyed by talk from Ben Bernanke that further US interest rate cuts will have little effect and the Federal Reserve will have to resort to alternative polices such as buying back longer-dated Treasuries, says Leaviss. He says such activity would help to reduce long-term borrowing costs and were used by the Japanese from 2001-06 as part of a policy of 'quantitative easing'. "Bernanke's comments have reaffirmed market expectations that the western wor...