Heavy issuance of corporate sector has pushed the whole bond yields toward higher especially in long-end tenor. This burden of issuance will continue until the end of this year, maybe November, this month. The heave issuance has been led by increased M&A in various industries. So, I don't need to increase corporate bond position rapidly for now.
But, I have to increase the position until the end of this year. Considering the deal is hardly done in December, I should act in this month. I expect the issuance burden will give the chance to buy nice securities.
Yes. The valuation of I.G. corporate bonds appears very attractive for now, especially as consider the relative value with CDS premium.
On the other hand, Goldman Sachs warns the fundamentals of IG companies deteriorate. Their leverage ratio has increased while earnings has declined.
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Considering this prospect, I should not be aggressive to increase corporate bond position... At the first stage, I will slightly OW in corporate bonds and pursue neutral position in total credit exposures including SSAs and securitized securities.
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