Investor flows into corporate bonds on longest streak since 2019, says BofA

By Harry Robertson

LONDON (Reuters) – Global investors poured $3.6 billion into investment grade corporate bond funds in the week to Wednesday, Bank of America said on Friday, in the 31st straight week of inflows, the longest streak since 2019.

A rise in global interest rates has forced up corporate bond yields, drawing in buyers attracted by the payouts as well as the hope that prices will rally once interest rates start to fall.

Investors put $5.1 billion into bond funds in general in the week to Wednesday, BofA said, citing figures from data provider EPFR, in the 23rd straight week of inflows.

“Investors are still buying into that additional bit of premium that they can get (on corporate bonds),” said Michael Weidner, co-head of global fixed income at Lazard Asset Management.

He said stronger than expected growth in developed markets had supported corporate debt markets. “Reporting seasons have continued to surprise on the upside,” he said, “the downside seems to be very limited on buying into credit right now.”

Despite the strong inflows, bonds have suffered as inflation has remained above central bank targets and interest rates look set to stay higher for longer. Yields move inversely to prices.

Investment grade bonds have fallen 1.7% so far this year, according to BofA’s measure, while government debt has dropped 5.6%.

Emerging market debt outflows resumed in the week to Wednesday at $1.1 bln, the bank said in its weekly Flow Show research note.

Investors pulled $6.7 billion from cash funds and put $1.8 billion into stocks and $600 million into crypto, BofA said.

(Reporting by Harry Robertson Editing by Alun John and Mark Potter)