NU Online News Service, July 18, 2003, 1:46 p.m. EDT – Investment-grade corporate bonds may now be somewhat more attractive than low-rated corporate bonds, according to an investment outlook released by Prudential Fixed Income, a unit of Prudential Financial Inc., Newark, N.J.
Corporate bonds are important to life insurers because they make up a large share of the insurers’ investment holdings.
Prudential Fixed Income analysts are “mildly positive” about investment-grade bonds and “modestly positive” with a “mixed outlook” about low-rated bonds.
The spreads between what healthy companies pay on investment-grade bonds and what the federal government pays on virtually risk-free government bonds are shrinking. But the spreads are still wider than they have been in recent years, the Prudential analysts write.