US investment grade credit: A buy or a bubble?

The strong economy and market pressure may drive companies to pay down debt

Time to read: 4 min

Recent market stress surrounding trade policy, the US government shutdown, Brexit and recession fears has increased focus on the US investment grade credit market and its sharp rise in leverage in the post-crisis period. Invesco Fixed Income believes these concerns are best analyzed through the lens of the BBB-rated portion of the US investment grade bond market. Some investors worry that this segment is a ticking time bomb set to upend the US fixed income market. Credit spreads on BBB-rated bonds have widened 50 to 100 basis points in the past year.1 With a focus on BBBs, we tackle some important questions for investors: Is the recent sell-off in BBBs a sign of worse things to come, or has the market over-reacted? Are there stabilizing trends on the horizon?

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