A new trend emerging in corporate credit

Corporate credit markets are viewed by many as a key indicator to the health of equity markets. In a recent letter to clients Ben Griffiths of the Eley Griffiths Group made the following observations about the US high yield bond markets; "In mid 2007, this important component of the bond market effectively froze over, closing to deals and rollovers that imperilled much of corporate US and beyond. This presaged the market top and ensuing correction that became the ‘GFC’." Livewire recently spoke with Vimal Gor, Head of Income & Fixed Interest at BT Investment Management, to get his take on what he is currently observing in corporate credit markets. Gor says that while corporate balance sheets are in good shape (i.e. companies generally in better health), there has been a distinct widening of spreads which could impact some fixed interest investors. Gor says it is a trend that is starting to take hold in high yield markets and could start moving to investment grade securities. In this video Gor explains what he belives are the implications: