The bottom line first: The added liquidity provided by the EBC's TLTRO programme will continue to support credit spreads going into the second half of 2015. However, we see several factors that could increase market volatility including growth fears in China, defaults from low commodity prices (oil), the US rate hike and, not least, Greece.
Spreads have become slightly more attractive in 2015 (relative to 2014) but are still tight historically and in relation to default rate averages.
BBB is our sweet spot, with the best default compensation premium relative to risk offering the same compensation as BB but with much less volatility.
In HY it is 'the higher the better' and we prefer BB relative to lower grades.
In Nordic domestic currencies, we look for a premium among unrated issuers.
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