Barings eyes BB and BBB rated bonds

Baring Asset Management sees BBB and BB rated corporates as offering the best risk and reward trade off to fixed interest investors. The group's credit analyst, Nigel Sillis, said investors should focus on the bottom end of investment grade and top end of non-investment grade products. Default risk within investment grade credits runs at around 1%pa, rising rapidly into the mid-teens outside of this. Sillis estimated a default probability of 16% for European high yield bonds yielding 10% and above. He added that those who wanted an income in excess of 10% were going to find it very hard...