Snowden: 'outrageous' spreads hit 1920s levels

Old Mutual corporate bond head Stephen Snowden believes a macroeconomic phenomenon has put yields at 'outrageous' levels. The manager of the £1bn Old Mutual Corporate Bond fund said investment grade credit spreads reflect Armageddon-like circumstances.

"If the spreads on offer actually reflected the degree of concern, equities would be a lot lower than they are," he said. "You have to go back to the 1920s to see values as high as they currently are." Snowden said around 6.5% of US mortgages are currently over 30 days in arrears but 50% were delinquent in the 1920s and 1930s. "Are we back to the Great Depression? Not yet at least," he added. "Credit spreads reflect an absolutely staggering amount of bad news. They are compensating you approximately four times as much as you would have needed for the period of defaults in 1985." H...