$Bank of America explained why global investors are betting on corporate bonds
The US bank reported that investors deposited $5.1 billion in bond funds overall during the period under review, marking the 21st consecutive week of inflows.
A team of Bank of America analysts revealed that global investors placed $3.6 billion into high-credit quality corporate bond funds in the week ending Wednesday. In this way, the 31st consecutive week of entries was completed, the longest streak since 2019.
Rising international interest rates forced yields on private debt to rise, attracting buyers seeking payments. Another factor was the hope that bond prices would rebound when rates begin to fall.
The US bank reported that investors deposited $5.1 billion in bond funds overall during the period under review, marking the 21st consecutive week of inflows.
"Investors are still buying that extra premium they can get from corporate bonds," Michael Weidner, co-head of global fixed income at Lazard Asset Management, told Reuters.
According to the expert, stronger-than-expected growth in the most developed markets supported the corporate debt segments. âReporting seasons continued to surprise on the upside. The downside appears to be very limited in purchasing credit at this time,â he added.
Still, despite the inflows, bonds suffered because inflation remained above the U.S. central bank's targets and interest rates appear to stay higher for longer. In fact, so far this year, private bonds have fallen 1.7%, while public bonds have fallen 5.6%.
