Corporate Bonds Have Become a Deal-Seeker's Nightmare
Rising currency hedging costs mean investors are facing unpalatable choices leading to "the definition of reach-for-yield behavior," according to Deutsche Bank analysts.
This article is for subscribers only.
There are no bargains left in U.S. corporate credit, according to Deutsche Bank AG.
Ultra-low interest rates in Europe, Japan and the U.K. have spurred investors to seek returns by buying the debt sold by U.S. companies with investment-grade ratings, leading some analysts to label the market as "the only game in town." But the rush into the asset class and the rising cost of protecting against currency-risk on dollar-denominated securities means foreign investors are facing an increasingly unpalatable menu of options when it comes to generating higher returns by buying U.S. corporate debt.