13 Nov 2023

Investor Repositioning on HY Revealed in Latest BoFA Credit Survey πŸ”„πŸ“ˆ

The recent BofA Credit Investor Survey reveals significant shifts in market sentiment. For Investment Grade (IG) investors, net positioning dropped to -8% net underweight in November from a +8% net overweight in September. Conversely, High Yield (HY) witnessed an uptick, reaching +18% net overweight in November, the highest since Jan-2022. Notably, HY investors are more optimistic about spreads, with the net share expecting wider spreads dropping significantly for the 3 and 6-month horizons. Delving deeper into investor positioning, the HY landscape presents a nuanced picture. The primary repositioning in November focused on the #frontend (1-3y) and #higherquality of the HY. Many asset allocators are embracing a barbell strategy, blending exposure to the intermediate/long end of high-quality corporate bonds or Treasuries with a portion invested in the front end of the US HY, enhancing the average yield. The goal is to navigate economic uncertainties by benefiting from the safety of high-quality fixed income and compensating for potential defaults in the HY space. Could this strategic approach push the HY-IG Yield Ratio lower, considering it already reaches post-GFC lows? #CreditMarkets #Investing #FinanceInsights πŸ“ŠπŸ’Ό Source: BoFA


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