Drop in hedging costs makes US high-yield bonds a bargain

“Amid all the drama in financial markets over the past couple of weeks, it has been easy to overlook one knock-on effect that could meaningfully influence global flows in corporate bonds. That is, the substantial decline in the cost of hedging US dollar exposure out of US credit investments.”

In the Financial Times, Vivek Bommi, senior portfolio manager at Neuberger Berman, discusses why the US high yield market has become more attractive to UK, European and Japanese investors thanks to the decline in hedging US dollar exposure.