Strong prospects for corporate bonds

Fund manager's comment

Investment grade bonds have enjoyed an extremely good run in the past couple of years. Improving fu...

Investment grade bonds have enjoyed an extremely good run in the past couple of years. Improving fundamentals and a strong technical backdrop have led to significant rally spreads since the end of 2002. Corporate balance sheets have been repaired and default rates have been coming down since the high profile, high grade failures to pay in 2001 and 2002. Does this fundamental backdrop mean investors should remain overweight sterling credit in 2005? In answer to this question, one could say that given the recent tightening in corporate bond spreads, especially in the third quarter of ...