What NIRP Hath Wrought

in Debt/IG/Investment Grade by

The relentless hunt for yield continues unabated and it can’t even be hedged anymore when it comes to US government paper thanks to a worsening dollar crunch. So what is one to do? Well, dive into USD corporate paper of course:


From Wells:

“Alongside this rapid expansion of the corporate market, the investor base has also changed. While corporates were traditionally dominated by U.S. institutional buyers (insurance and pensions), since 2008 two new buyer bases have grown in stature.”

“From 2009 to 2014, the retail segment was the fastest growing part of the market, more than doubling as a relative proportion of the market. While flows remain net positive, growth has since slowed as returns have lagged, particularly on the HY side ($53 billion in net outflows since January 2014 or ~14% of AUM at the time). Since 2014, following the Taper Tantrum, which established the Fed on a hawkish course relative to most other central banks, the foreign buyer has emerged as the new force to be reckoned with in the corporate market and now owns, by our estimates, 40% of the U.S. corporate market.”

More here


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