- Warning about "extreme overvaluation" for some time in high-yield, Martin Fridson says the market is at long last back to being at least "moderately undervalued."
- The average spread per the BAML index between junk and Treasurys has climbed to 508 basis points from a low of about 340 bps this summer, and Fridson's model of the option-adjusted spread pegs fair value at 442 bps. The 66 basis points between that and 508 represents about one-half of a standard deviation - hence the "moderately."
- UBS is a buyer as well: "We believe there has been shift in the relative attractiveness between the equity risk premium and the more defensive credit risk premium, and we add to overweight position in U.S. high yield credit."
- Previously: BlackRock buying the dip in junk bonds
- ETFs: HYG, JNK, HYLD, HYS, SJNK, SJB, BSJF, BSJE, BSJG, HYHG, ANGL, BSJI, HYLS, WYDE, UJB, XOVR, THHY, BSJH, HYZD, QLTC, SHYG, HYGH, TYTE, BSJJ, BSJK, HYND, BSJL, BSJM