Mutual Funds Are Scrambling to Buy Corporate Bonds


“Helping to squeeze prices – and performance – higher.”

How best to explain the recent run in investment-grade credit?

Analysts at Deutsche Bank AG have an idea. They point out that mutual funds have snapped up $275 billion worth of the bonds sold by companies with relatively stronger balance sheets in 2015 — far outstripping the net supply of new debt sold into the market. “The $275 billion increase in mutual funds’ credit holdings was twice the level of credit supply last year,” write analysts led by Dominic Konstam, Deutsche’s global head of rates research.

The scramble for investment-grade bonds, particularly new issues that typically outperform the wider market, has helped squeeze debt prices higher and reduced the amount of extra ‘spread’ investors demand to compensate them for added risk…


Mutual Funds Are Scrambling to Buy Corporate Bonds

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