IG Downgrades Big Worry for 2019, Says Barclays's Graper

The video discusses the current state of the investment grade credit market, highlighting increased volatility and the impact of Federal Reserve policies. It examines the dynamics of bond market supply and demand, noting a significant decline in issuance and spread widening. The discussion also covers the challenges of credit market participation, particularly due to foreign demand and hedging costs. Concerns about credit downgrades, especially in the triple B segment, are addressed, along with the role of rating agencies. The video concludes with an outlook for the market, identifying potential opportunities for investors.

What is the current sentiment among issuers and investors in the investment grade credit market?

• Indifferent and stable

• Optimistic and aggressive

• Cautious and repositioning

• Pessimistic and withdrawing

What was the issuance level in December, and how does it compare historically?

• 12 billion, average since 2008

• 8 billion, lowest since 1995

• 18 billion, highest since 1995

• 15 billion, moderate since 2000

What has been a significant concern regarding Triple B credits?

• Their increase in interest rates

• Their downgrade to junk status

• Their stable outlook

• Their upgrade to single A

What factor has contributed to the departure of cash from the system?

• Lower interest rates

• Stable market conditions

• Higher hedging costs

• Increased foreign demand

What is the expected trend in U.S. investment grade bond issuance for next year?

• Increase by 10%

• Remain stable

• Decline by 5 to 10%

• Double in volume

How has the yield landscape changed for U.S. dollar debt in the credit index?

• No change in yield

• 50% yields more than 5%

• 19% now yields more than 5%

• Only 3% yields more than 5%

What is a potential opportunity for insurance companies and pension accounts?

• Investing in low-yield bonds

• Avoiding the market

• Reducing their portfolio size

• Exploring high-yield opportunities