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What is interesting in the fixed income and credit universe today? - Michael Levin

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1. What is interesting in the fixed income and credit universe today?

Video transcript

1. What is interesting in the fixed income and credit universe today?

I'm actually quite constructive on fixed income. If you compare or contrast where we were last year, which is we had low rates, tight credit spreads, and imminent prospects of three to four Fed rate hikes, it's a very challenging fixed income market. Whereas if you contrast it where we are today, yields are attractive, spreads are little bit wider, and the Fed is a little bit more dovish. In fact, with higher yields and a flattening of the curve, there's pretty attractive opportunities at the short end of the curve in high-grade fixed income. You can get yields 4+ % on the investment grade side, and if you have blended portfolio, even on average investment grades, you can get 6+ % yields, which is quite attractive. And you can even hedge out the duration risk, because Libor is about equivalent to the 10-year yield and slightly above five year yield, so there's a lot of attractive opportunities at the short end, high credit quality at the fixed income side. And then we still like floating rate asset classes like senior secured bank loans, so quite optimistic about fixed income. And then in the region, if you look at Asian credit, also very attractive. You get a nice yield pickup, for comparable credit quality, and you can develop a portfolio about average investment grade in excess of 7% yields, with modest durations about three and a half.