Investors Should Ditch BBB-Rated Securities As Risks Grow: UBS

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Mani
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Growth of BBB rated debt

Investors should remain cautious about lower-quality credits and underweight BBB rated securities, particularly longer dated issuers at risk of fallen angel status, notes a report from UBS. Stephen Caprio and Matthew Mish of UBS in their January 14, 2016 research note titled: “2016 US IG Outlook: How The Dominos Will Fall?” prefer A-rated credit, particularly longer-duration issues. Substantial growth in total IG corporate universe from the growth of more risky BBB-rated securities Caprio and Mish reckon the post-crisis macro paradigm of Fed quantitative easing and the investor bid for yield has greatly expanded the size of risky BBB corporates. The…

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Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports

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