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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.

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