Skimpy Yields On Treasuries Got You Down? Try Corporates For More Income

By Michael Terry, CFA – Seeking Alpha

September 19, 2012

Over the past few months, I have written a decent number of articles on individual bonds such as Hewlett-Packard (HPQ), Nokia (NOK), Cisco (CSCO) and Anheuser-Busch InBev (BUD) – some I liked, and some I didn’t like. It has, however, been nearly five months since I addressed the bond market (or more specifically, the credit market) generally.

In my last macro corporate bond article “Credit (Corporate Bonds) Still Attractive But Headwinds Are Building,” I opined:

While there are headwinds facing the credit markets, I believe there is room for additional spread tightening and positive excess returns. As a result, I continue to recommend investors stay overweight credit, especially in the “BBB”, “BBB/BB” and “BB” rating sectors.

In May, I wrote an article titled “Why High Yield Bonds Should Continue To Perform Well” in which I opined:

High yield bonds should continue to perform well going forward due to the demand for yield and the supportive credit, economic, and ratings environment. As I have said previously, I continue to favor the “BB” and “5B” ratings segments of the high yield market.

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