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Wake up and Smell the Fundamentals

Deutsche Bank strategists point out that bond investors have been turning a blind eye to how leveraged many U.S. companies are these days.

By Tracy Alloway, Bloomberg | Updated on June 04, 2015

Pop quiz: Which corporate debt has performed better this year—the U.S. dollar-denominated bonds issued by Russian companies or investment-grade U.S. corporates?

If you answered Russian ones, well done. For all the talk of Russia’s economic woes, it’s actually the bonds issued by some of America’s most creditworthy companies that have lost ground so far in 2015. In fact, prices on U.S. investment-grade bonds fell 1.1 percent alone in the first two days of June. Why the (rather sudden) lack of love for what was once one of the hottest asset classes around?

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