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Treasurers chase higher yields in corporate debt

Data published by Clearwater Analytics has shown that treasurers are continuing to increase their investment in corporate debt, while exposure to other asset types, such as US government debt and municipal bonds, are decreasing.

In July, more corporate cash was invested in corporate debt than in all other asset types combined, with allocations in corporate debt rising to 50.18% of all corporate cash. The corporates in the study were public, non-financial US corporate entities, all of which are direct clients of Clearwater Analytics.

The current allocation of corporate cash in corporate debt is an increase of 16.58 percentage points compared to the share in that asset class in August 2013, which stood at 33.6%. However, allocation in commercial paper has dropped from 10.3% in August 2013, to the current figure of 6.97%. US government debt has also lost ground; in August 2013 it had a share of 26.48% of corporate cash allocations but that has dropped to 20.76% as of this month.

Rhet Hulbert, senior portfolio manager at Clearwater Advisors, told the Wall Street Journal that corporate investment in US government debt is at a “low not seen since December 2011,” adding that this is driven by a desire for higher yields, which many investors perceive in the form of corporate bonds.

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