Investment-Grade Corporates: A Tale of Two Markets

Long Corporates Offer Less Yield and Spread Advantage than Usual

Investors are accustomed to getting a snapshot of the market by looking at the latest index statistics. But today, average spreads and yield for investment-grade corporate bonds are deceptive. A look under the hood reveals that intermediate-maturity corporates are a much more compelling opportunity than long-maturity ones.

Why? The spread between the two has compressed in recent years and is now the narrowest it’s been since the early days of the pandemic. And the yield advantage of long corporates over intermediate bonds is now near zero.