In its latest high-yield and bank loan outlook, Guggenheim Partners says certain areas of leveraged credit are currently overvalued – particularly CCC-rated corporate bonds. The firm says spreads in these securities have “room to run” before reaching historic lows, but it believes now is the time to look for higher quality investments.
Based on its analysis – which examines where current spreads lie compared to their historical lows – Guggenheim says it currently favors B-rated corporate bonds, because they “are not as richly valued and are also less interest-rate sensitive than BB-rated bonds.”
