Goldman Sachs believes that the highest-rated corporate debt, such as AA and BB ratings, has longer duration profiles and thinner spreads, making it more sensitive to higher real rates. The bank notes that lower-rated debt, particularly BBBs, has outperformed AAs and As in both USD and EUR markets. Goldman Sachs now favors BBBs in the USD investment grade market and is taking a more aggressive stance moving down-in-quality in the European market. The strategy also includes shifting from BBs to Bs and reducing exposure to CCCs.
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