Goldman Says Rich Credit Valuations Unlikely to Cheapen in 2025
- Expects ‘solid year’ for total returns driven by higher yields
- Sees ‘valuation conundrum’ as key reason to hedge portfolios
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US corporate bond investors will likely start 2025 with the most challenging valuation backdrop in decades, but attractive yields should keep the asset class compelling, according to analysts at Goldman Sachs Group Inc.
Investment-grade and high-yield bond spreads are expected to stay within the same range that has prevailed for most of this year, analysts led by Lotfi Karoui and Spencer Rogers wrote in a note Tuesday. That would mean excess returns — or gains over Treasuries — would be low and driven by simply holding on to the bonds, or carry, according to the note.