Swiss Life Asset Managers is expecting further downgrades and defaults in the corporate sector. It remains defensively positioned.

The COVID-19 recession is likely to be one of the most severe, but also one of the shortest recessions in historical terms. Spreads are continuing to fall, albeit with a high fluctuation range. However, driven by strong monetary and fiscal support, this development appears to be ahead of economic momentum.

Corporate debt, which was already high before the downturn, has accelerated further. Swiss Life Asset Managers expects further downgrades and defaults due to low profits resulting from weak demand. It therefore remains cautiously positioned, especially in heavily exposed sectors such as travel and leisure. As interest rates are expected to remain low for longer, Swiss Life Asset Managers is sticking to its neutral to slightly long duration.  

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