Global Corporate Bonds New Opportunities

‘Believe’ in global corporates

Doubt lingers around the global corporate fixed income sector, but Payden’s Trevithick urges that investors “believe,” a la Ted Lasso. Why?

Yields are high—around 4% in Euro-denominated bonds and over 5% in U.S. and Sterling issues. Central bank cuts have so far failed to materialize, keeping rates attractive for now, especially at the long end.

  • Says Trevithick, “Duration is your friend. So, while global central bank cuts may have been pushed back further in 2024, we still expect them to come, and in the meantime, you're clipping a nice coupon. Even if we only get two to three rate cuts in the year ahead, we're looking at total returns in the high single-digits. If we're pushing out the rate-cutting cycle further, that sets us up nicely for 2025, 2026 with nice solid returns, you want to have that longer duration component within your portfolio.”

Three key factors driving performance

Three key factors drive global corporate bond returns fundamentals, technical factors, and valuations.


  • Fundamentals are strong as corporate issuers are benefiting from the stronger than expected global economy.
  • Corporate issuers locked in lower borrowing costs prior to 2022 by issuing longer dated bonds with the proceeds going towards paying down shorter maturity bonds.
  • As a result, interest costs remain historically low for corporate borrowers, even after the run-up in rates. The average coupon on the Global Investment Grade Corporate index is now just under 3.75%.
  • Margins are strong, given still higher-than-normal inflation in the U.S. and Europe.
  • Leverage is relatively low, declining in Europe and stable in the U.S., as investors have been exercising prudence with their capital structures.