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What's the Hubbub With BBB Bonds?

The quality of BBB corporate bonds has deteriorated in some places, but a few managers have continued to add exposure.

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A version of this article was published in the September 2018 issue of Morningstar FundInvestor. Download a complimentary copy of FundInvestor by visiting the website.

In March, my colleague Emory Zink wrote about elevated risks of a sell-off in the corporate bond market ("Tiptoeing Towards the Exits in Corporates"). Citing remarkably narrow option-adjusted spreads among investment-grade corporate bonds (85 basis points in January--a decade low), she discussed some intermediate-term bond funds that had begun to pare back their corporate exposures.

Alaina Bompiedi does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.