Columbia Threadneedle: Downgrades, defaults & dispersion: Covid & credit

It’s becoming difficult to find an 'average' bond. As economic uncertainty increases, the dispersion widens, creating opportunity for active managers

Markets reacted violently as global economies adopted shelter-in-place policies to combat the spread of Covid-19 earlier this year. Corporate bond credit spreads (or risk premiums), driven by heightened uncertainty and revenue pressure, widened dramatically to reflect the increased risk of downgrade and default. While the magnitude of the sell-off was significant, the direction seemed quite logical given the sudden halt of global commerce. Read article