Feb. 9 (Bloomberg) -- Investors in the lowest rated corporate bonds are looking past concern that worsening government finances will derail the economy, paying prices that imply the fastest drop in defaults in more than a decade.
“Recent trends in asset prices will not change the trend in the default rate,” said Peter Acciavatti, head of U.S. high yield and leveraged loan credit strategy at JP Morgan. “Our view is default rates will continue to fall due to the improvement in capital markets over the last year, even as markets have become a little choppy of late. We still like the asset class.”
Acciavatti, the top-ranked high-yield strategist in Institutional Investor magazine’s annual poll for the past 7 years, cut his forecast for junk-bond defaults to 2% by year-end from 4%.
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