Swap Corporates for Sovereigns, QS: Barclays

Swap Corporates for Sovereigns, QS: Barclays

Bonds

Bond investors would do well to sell EM corporate bonds in favor of sovereigns and quasi-sovereigns, Barclays says in a note. “Corporates are tighter than usual, compared with quasi-sovereigns and sovereigns. This dislocation has been driven by weaker flows into sovereign/quasi funds rather than a justifiable fundamental reason,” the bank says. A peak in the credit cycle and a gradual rise in defaults mean corporate should be cheapening versus sovereigns. This trend should accelerate as EM growt

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