UBS is bullish on investment-grade corporate bonds. Here's why

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Yields are down from their 2023 highs, but there is still plenty for income investors to admire about investment-grade corporate bonds, according to UBS.

Yields may be down from last year's highs, but there is still plenty for income investors to like about investment-grade corporate bonds, according to UBS. The effective yield on the ICE BofA U.S. Corporate Bond Index , which tracks the performance of U.S. dollar-denominated investment-grade corporate debt, is currently hovering around 5.5%. Last October, it was 6.4%. Bond yields move inversely to prices.

2% from 3.65% in 2022, McAlinden said. "This equates to an income return for IG of about 35bps per month, compared to 22bps for Treasur, with a market weighted coupon of 2.7%," he said, referring to basis points, or one one-hundredth of a percentage point . Spreads over Treasurys are also likely to stay resilient, McAlinden believes.

 

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