Swaps Beating Bonds Signal Corporate Debt Rally to Endure
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For those looking for signs that October’s rebound in corporate bonds can continue, look no further than the credit-default swaps market.
The cost to insure against losses on U.S. speculative-grade company debt has dropped to 69 basis points less than the yield premiums that investors are getting paid to own the securities, the biggest difference this year, according to JPMorgan Chase & Co. For investment-grade, swaps have fallen to 16 basis points less than the bonds they protect, about the widest for 2014.