UIA-IM Analyzes Corporate Credit Developments to Date and Provides an Outlook for the Next 12 Months
Washington D.C. (June 29, 2020) – The U.S. corporate bond market has undergone substantial change in response to COVID-19.
- Issuers rushed to the capital market to raise cash reserves to withstand potential financial stress, and created a surge in corporate bond supply. Investment Grade issuance is up 90% over a comparable period last year.
- Investor demand has outstripped supply. Demand has been strong from institutional funds adding exposure at attractive yield spreads to Treasury and non-U.S. investors seeking positive yields.
- The Federal Reserve has entered the corporate bond market under the authorization provided by the CARES Act, and has launched a purchase program that may total as much as $750 billion or 11.6% of the total outstanding value of investment-grade corporate debt.
- UIA-Investment Management understands the recovery and government stimulus will not affect all corporate issuers equally, and expects the coming year will be characterized by substantial performance dispersion by sector and issuer – in other words, we are entering a true "bond-pickers" market. This "pandemic credit cycle" is unique and offers fundamental value investors an opportunity to generate substantial outperformance relative to market benchmarks.
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For more than 90 years, Ullico has been a proud member of the labor movement, keeping union families safe and secure. From insurance products that protect union members, leaders and employers, to investments in building and infrastructure projects that have created thousands of union jobs, our customers continue to trust us with protecting their families, employees and investments. The Ullico Inc. Family of Companies includes: The Union Labor Life Insurance Company; Ullico Benefit Solutions; Ullico Casualty Group, LLC; Ullico Investment Company, LLC; and Ullico Investment Advisors, Inc. For additional information, visit www.ullico.com.
UIA Investment Management, LLC (UIA-IM) is a U.S. fixed-income management firm offering a range of U.S. fixed-income strategies tailored to meet the needs of institutional investors, including Taft-Hartley, public, and corporate pension funds, endowments, foundations, family offices, and sovereign entities.