Valuations in favour of corporate bonds

Last year we were happy to espouse additional exposure to corporate bonds as a way to enhance return in an environment where yields on government bonds were becoming less than attractive. The view at the time was based on the relative cheapness of corporate bonds against government bonds, and our belief that the deflation scenario was not likely to materialise, and that the growth that was to follow was to be beneficial for corporate bonds. As measured by the yield spread between corporate and government bonds, the view has paid off handsomely. However, it is time now to reconsider. Wit...