Banking on investment-grade corporate bonds may not be right for the investor who likes quick returns, but it does the trick for CD, Treasury or agency buyers, a fixed-income specialist told CNBC Thursday.
“They [investors] may say, ‘I want the safety of a strong corporation, but I need the yield, something greater than what’s going on in the Treasurys,’ ” said Kevin Giddis, who has been at Morgan Keegan since 1988 and president of its fixed-income capital markets desk since March.
He said demand for investment-grade corporates is brisk.
“Those investors say, ‘I want an A-rated credit. I don’t want to jump off into the high-yield world, but I want to get paid more.”
While year-to-date the S&P 500 has fallen, corporates have yielded investors 9.44 percent. A Citigroup banker told CNBC Tuesday that high-yield bonds are offering returns between 8.25 percent and 8.50.