Corporate bonds

While it has been undoubtedly a difficult year for global equity markets, corporate bonds have also found the current environment very tough. Prior to the credit crunch, corporate bonds had enjoyed a period of good performance as the spreads compared to government stock tightened significantly, including for lower-rated or sub investment grade credits. Corporate bond spreads in this case refer to the difference in the yield between the bond and a risk-free investment such as government stock. When the spread widens, the market is factoring in a greater chance of default by the corporate bon...