Sentences with phrase «hold investment grade debt»
Any portfolio that is mandated to only hold investment grade debt or above will no longer be able to hold that bond and the resulting selling may drive down the price of that bond.
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So if a company is drowning in debt and has little capacity to pay it back, its bonds will get a junk rating and they won't make into indexes that hold only investment - grade issues.
Many investors will never want to venture outside investment grade debt (BBB or higher) and will only find themselves holding bonds which are considered junk after the debt has had its credit rating downgraded.
The actual downgrade to junk status usually drives more selling pressure, particularly from funds that are restricted to holding investment - grade debt exclusively.
If investors grow anxious about holding low - quality bonds, they may trade them for the higher - quality debt, such as government bonds and investment - grade corporate bonds.
If investors grow anxious about holding low - quality bonds, they may trade them for the highest - quality debt, such as U.S. Treasuries and investment - grade corporate bonds.
Our research on the Fundamental Index ® concept, as applied to bonds, underscores the widely held view in the bond community that we should not choose to own more of any security just because there's more of it available to us.10 Figure 9 plots four different Fundamental Index portfolios (weighted on sales, profits, assets and dividends) in investment - grade bonds (green), high - yield bonds (blue) and emerging markets sovereign debt (yellow).11 Most of these have lower volatility and higher return than the cap - weighted benchmark (marked with a red dot).
One challenge in spinning off its gas network into a separate company and making it attractive to investors was the amount of debt it could hold relative to its assets — it would need to be higher than the energy regulator's limit, while at the same time needing to maintain an investment - grade credit rating so it could benefit from cheaper borrowing costs.