Investment grade-rated corporates are the most vulnerable asset class in the credit market, with the decades-long bond bull run set to come to an end as central banks hike interest rates and unwind asset purchases, according to senior analysts.
“The punchline is that all our analysis points towards negative returns and higher volatility in the credit market,” says Viktor Hjort, global head of credit strategy at BNP Paribas. “Our view is that it’s late in the credit cycle. The riskiest asset class is actually non-financial investment-grade corporates as they are the biggest beneficiaries of quantitative easing (QE).”
