Are investment-grade corporate bonds still a good value?
http://www.investmentnews.com/article/20100308/FREE/100309904 Over the last 12 months, highly rated corporate bonds have clearly benefited from the flight to quality and a migration from equities and money funds into fixed income. However, is it too late to find relative value in high quality corporate bonds? A strong case can be made that while the bargains are gone, highly rated corporate debt will likely be very much in demand in 2010. In late 2008 and early 2009, corporate spreads to U.S. Treasuries were at historical extremes. During the last few months, spreads have settled into ‘normalized’ ranges (see nearby chart of corporate spreads to Treasuries). Will normalized ranges continue to shift in favor of even tighter spreads and greater flows into corporate debt issues? Many economists have opined that the credit crisis-induced volatility in 2008 and first half of 2009 was likely to be once-in-a-generation phenomena. After unprecedented Fed intervention in the credit markets, hig
