Citigroup Signals End of CCC Bond Rally With Sell Recommendation
This article is for subscribers only.
Investors betting that the lowest rungs of the U.S. junk-bond market will continue to deliver superior returns may be disappointed, according to Citigroup Inc. credit strategists.
A record rally for debt in the CCC rating tier, which returned 250 percent from January 2009 through February 2014, is unlikely to continue, Citigroup analysts led by Michael Anderson said today in a report that recommends investors “underweight” the securities. The broader high-yield market returned 137 percent over a similar period, leaving CCC notes yielding an historically low 3.48 percentage points more than higher-rated bonds in the BB tier.