Speculative-grade corporate bonds are on the “overvalued side,” according to Bonnie Baha, director of global developed credit at Los Angeles-based DoubleLine Capital LP, which manages about $50 billion.
Baha, who was speaking with Erik Schatzker on Bloomberg Television’s “Market Makers” today, said she likes bank loans and emerging-market corporate bonds.
Speculative-grade bond yields in the U.S. fell to a record-low 5.78 percent yesterday, according to the Bank of America Merrill Lynch U.S. High Yield Index.
The average price of the S&P/LSTA 100 index, which tracks the largest first-lien loans, climbed to 98.82 cents on the dollar yesterday, the most since Jan. 24. That’s close to a seven-year high of 98.9 cents reached earlier this year.
High-yield, high-risk debt is rated below Baa3 by Moody’s Investors Service and lower than BBB- at Standard & Poor’s.