DoubleLine’s Erickson on BBB Debt 2-2-22
Posted: Wednesday, February 16, 2022

The lowest rated blue-chip corporate bonds are attractive, given fatter yields and less downgrade risk than higher-quality debt, according to Monica Erickson at DoubleLine Capital. “Companies learned a lesson in 2022 that being investment-grade is a significant advantage,” said Erickson, the firm’s head of investment grade corporates, in a phone interview. The difference in spreads between U.S. Bonds rated BBB and BB — the highest rung of junk — peaked at 124 basis points last month, implying bigger interest payments for those below investment grade. Borrowers need to monitor their access to capital, which is more volatile in junk markets, added Erickson, whose company manages $134 billion in assets.

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