Adding Global Value
While IG credit overall looks compelling today, we believe there are four distinct areas of inefficiencies in credit markets that present an opportunity to generate alpha.
A HIGH-QUALITY PORTFOLIO WITH RESILIENT INCOME POTENTIAL
Barings Global Investment Grade Credit Fund
Around 95% exposure in high-quality IG Credits
(as of March 31, 2026)
Potential for Income Resilience
Diversification Prospects to Riskier Assets
Elevated Bond Yields Suggest Attractive Total Return Potential
Global investment grade (IG) credit bond yields are currently trading at significantly elevated levels. With yield level exceeding 4.5%, the market has historically delivered attractive total returns in the following 24 months.
| Yield to Maturity | Average Return in the Subsequent 6 Months | Average Return in the Subsequent 12 Months | Average Return in the Subsequent 24 Months |
| >4.5% | 2.9% | 5.8% | 12.2% |
Source: Barings and Bloomberg. Data range from December 31, 2004 to March 31, 2026. Based on Bloomberg Global Aggregate Credit Total Return Index and monthly observations.
AI Hyperscaler New Issuance: A Positive Boost For IG Corporate Fundamentals
Hyperscalers have increasingly tapped into debt markets to fund capital expenditure heavy AI infrastructure build outs. Relative to the broader market, they tend to operate with lower leverage, maintain interest coverage ratios that are generally stronger and generate higher margins, which may contribute to improved credit metrics across the overall market.
U.S. IG Corporate Bond Market Fundamentals Are Improving
| U.S. IG Corporate Bond Market | ||
| Market (Ex-Hyperscalers) |
Hyperscalers Only | |
| Net Leverage | 2.9 | 1.1 |
| Interest Coverage | 9 | 64 |
| Revenue Growth (YoY) | 5% | 15% |
| EBITDA Margin | 31% | 42% |
| EBITDA Growth (YoY) | 4% | 22% |
| Capital Expenditure Growth (YoY) | 6% | 72% |
Sources: JP Morgan. As of April 1, 2026. EBITDA denotes as Earnings Before Interest, Taxes, Depreciation, and Amortization.
Strong Diversification Prospects to Riskier Assets
IG credit offers the potential for diversification in a broader portfolio of higher risk assets such as equities. In particular, IG credit is relatively more sensitive to interest rates, which provides capital appreciation potential in a falling rate environment.
Source: Barings and Bloomberg. As of March 31, 2026. Global Equities represented by MSCI ACWI Index. Global Investment Grade Credit represented by Bloomberg Barclays Global Aggregate Credit index (USD Hedged). Analysis shown covers the period from 2001 to April 8, 2025.
*2025 analysis covers period from January 1, 2025 to April 8, 2025, the period of the largest drawdown year-to-date.
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