Below is part of an article from Reuters. Essentially, it says that credit investors are overweight their benchmarks. In IG space, investors have been drawn to financials due to the improvement in their financial condition as well as the relative "cheapness" when compared to other sectors and on a ratings basis. HY has focused on industrials and energy (two primary issuers) as these sectors stand to benefit from current trends in both sectors, an improved economic outlook and, realistically, the availability of bonds. This should really come as no surprise as investors have been embracing risk for a while now and investors need yield. I personally think that credit will continue to attract investors and outperform on an excess spread basis.
Bond investors boosted U.S. corporate debt exposure to the highest levels since at least 2005 as they took a more optimistic economic outlook, according to a Bank of America Merrill Lynch survey released late Tuesday.
The first-quarter survey found 89 percent of high-grade corporate bond investors were overweighted with those assets, well up from 29 percent in the fourth quarter. In riskier high-yield bonds, 71 percent of investors were overweight, compared with 30 percent in the prior survey.
Investment grade bondholders were most bullish on financial company debt. Nearly 70 percent of investors said they were overweight the sector, up from about 30 percent.
In high-yield, investors raised allocations to industrial and energy bonds but stayed bearish on financial companies.
Concerns of investors were topped by the European sovereign debt and municipal bond crises, the survey found. Almost half of them said Europe's management of its sovereign debt burden was the bigger problem for U.S. credit markets.
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