According to Clearwater Analytics, corporates are looking increasingly to corporate bonds to invest surplus liquidity. The consultancy firm, which provides reporting and analytics on investment portfolios, said that its latest data shows a new record of 47.95% of total investment from companies is now in corporate bonds – a figure that has been increasing in the past five months.
In an interview with The Wall Street Journal, Rhet Hulbert, a senior portfolio manager for Clearwater Advisors said: “Even with the possibility of the Fed beginning to raise rates later this year, investors feel that higher yielding corporate bonds are better alternatives than low yields available in short money market products.”
The evidence is building that corporate bonds are an increasingly attractive solution that more corporates are taking. Corporate issuers such as Qualcomm and Verisk Analytics both issued investment-grade bonds last week, according to Market Realist's David Ashworth, who wrote on 19 May: “Corporates have been very active in the primary market for the last few weeks, making use of comparatively low rates to raise debt for refinancing and acquisitions.”
According to BofA Merrill Lynch, bond yields touched a high of 3.15% in the second week of May. But they fell as the week progressed and ended lower than the previous week.