Live on Bloomberg TV

00:00Kelly, let me begin with you. Why on earth are credit spreads so tight with so many risks, not just Taylor Riggs, but risks coming at us thick and fast? We've definitely been sitting at historically tight spreads in the world of high yield for some time. Absent the real dislocation we saw back around Liberation Day, and I think there's a few factors that support it. We've really had a strong technical backdrop just over the last 15 consecutive weeks. We've had about 15 billion come into the market through high yield ETF inflows. We've continued as managers to collect a lot of coupons on our existing assets this year. Most deals, while it's been a lot more rampant as of late, it's still been primarily refinancing oriented. So we're recycling a lot of the same risk. So managers are needing to reinvest back into the market as they're getting bonds called away from them. We do have a pretty high quality market now, two very different than, say, ten, 20 years ago with the majority being double rated. And then we're also a pretty short duration asset class. We're just around three years or so in a duration. And so that mitigates the spreads as well. But we've had, you know, $40 billion plus of volume just this week. You know, what's the outlook? Does that continue? Do people take a step back and where across investment grade are you looking for opportunities? Yeah. I think Kelly, you know, was very accurate to a lot of the statements she had around just the demand for fixed income. And, you know, she's on the high yield side and, you know, just a few years ago to get high yield, you got 5% and now you're generally getting that in investment grade. So I think that's been driving a lot of the demand. I mean, we have seen a lot of pick up in issuance this week. So it's been a very heavy week. But overall, you just continue to see investors want out of the curve, particularly institutional investors wanting to get that four and a half to 6% and lock it in for a long time while staying in high quality investment grade.

No schedule data available.

BTV Channel FinderWatch BTV in your area

Barings' Burton on Tight Credit Spreads

Barings High Yield Portfolio Manager Kelly Burton and Invesco Head of North American Investment Grade Credit Matt Brill discuss tight credit spreads and where investors are looking. (Source: Bloomberg)

More From Bloomberg Real Yield
All episodes and clips

Bloomberg Markets
"Bloomberg Markets" is focused on bringing you the most important global business and breaking markets news and information as it happens.
More episodes and clips