Since September, BB-rated credits have become notably cheaper compared to BBBs, with the spread ratio widening to levels last seen in April. The recent weakness in BB credits largely stems from technical factors such as heavy new issuance in September weighing on secondary markets, portfolio de-risking amid renewed trade policy jitters, and market risk aversion due to stress among lower-rated private credit borrowers.

We view the dislocation as temporary and largely technical in nature. With fundamentals still supported by solid US growth, we see selective opportunities in higher-quality BB bonds that offer attractive entry points, while remaining conservatively positioned overall.