Oct 2023

DoubleLine Corporate Credit Briefing

IG corporate bonds returned negative 1.9% year-to-date (YTD) outperforming the Bloomberg US Aggregate Bond Index (the Agg) and U.S. Treasuries, which returned negative 2.8% and negative 2.7%, respectively.2 Given the longer duration of the asset class, IG returns have been impacted by the rise in Treasury yields, leading to negative returns, while spreads have fallen by only 1 bp. We believe this small spread tightening YTD has been caused by a stable-to-improving credit-quality environment and a supply-demand imbalance, with lower-than-average issuance coupled with strong demand from investors. The index duration has fallen YTD by 0.5 years as the 10-year Treasury yield rose 105 bps YTD, driving the sector’s yield per unit of duration to 0.97, slightly below its highest level in over a decade.