Payden & Rygel: Investors Do Not Need to Wait for the Fed to Find Value in Investment‑Grade Credit

LOS ANGELES, May 13, 2026 (GLOBE NEWSWIRE) -- Payden & Rygel, a leading global investment manager, believes investment‑grade corporate bonds remain a compelling source of income and portfolio resilience in 2026, even as macroeconomic and geopolitical uncertainty persists. Despite a modestly negative first quarter and a more tempered outlook for returns compared with 2025, the firm sees attractive all‑in yields and continued strong demand supporting the asset class.

After a strong year for investment‑grade in 2025, Natalie Trevithick, Managing Director and Head of Investment Grade Corporates at Payden & Rygel, expects returns to “normalize,” driven primarily by income rather than outsized price gains. While recent volatility and developments such as the conflict in Iran have complicated the macro backdrop, she notes that higher yields now provide investors with a meaningful cushion against further market swings.

“Markets move ahead of policy, and there is no reason for investors to sit on the sidelines waiting for the Federal Reserve,” said Trevithick. “At current levels, all‑in yields of roughly 5% to 5.25% in investment‑grade credit represent an attractive risk‑return profile for long‑term investors.”

Trevithick emphasized that, contrary to some commentary, investment‑grade bonds have not simply started behaving like equities. The asset class has remained relatively stable compared with stocks, with record issuance—approximately $465 billion in the first quarter, up 20% year over year—being readily absorbed as deals are often multiple times oversubscribed. Strong balance sheets and robust free cash flow among many large‑cap, often technology‑related issuers further underpin the market’s resilience.

Concerns that heavy new supply might overwhelm demand have so far not materialized. “There is still substantial cash on the sidelines, and in periods of uncertainty, investors tend to migrate toward higher‑quality assets,” Trevithick said. “Even with elevated issuance, we have not seen meaningful spread widening, which tells us the market is handling the volume well.”

She also addressed the interaction between private credit and the public investment‑grade market. While some stress in areas such as business development companies has spilled over into banks and insurers with private‑credit exposure, Trevithick views the systemic risk as limited and notes that public IG’s daily liquidity is a key advantage amid shifting conditions.

On sector positioning, Trevithick describes the team as broadly constructive rather than focused on a single “silver bullet” opportunity, with favored areas including global systemically important banks, utilities tied to AI‑driven power demand, and select technology issuers. She cautions that spreads are not “cheap,” making diversified exposure across A and BBB‑rated credits more important than hunting for obvious bargains.

Active management remains central to Payden & Rygel’s approach in this environment. With roughly $2 trillion in annual issuance and a market approaching $10 trillion, Trevithick notes that portfolio turnover of about 50% reflects a rich opportunity set for capturing new‑issue concessions, adjusting duration and sector tilts, and exploiting relative‑value opportunities.

“Risk is increasingly issuer‑specific rather than sector‑wide, which makes rigorous credit research critical,” she said. “We expect greater dispersion between outperformers and underperformers, and avoiding weaker credits will be just as important as finding the winners.”

Within multi‑asset portfolios, Trevithick continues to view investment‑grade credit as a core allocation that can provide attractive income, relative stability, and diversification alongside equities and other risk assets. She expects episodes of volatility to be largely rate‑driven and temporary, with credit fundamentals and spreads remaining comparatively stable.

“We are paying close attention to the macro environment, but we are not reacting to every headline,” Trevithick concluded. “By focusing on long‑term fundamentals and using active management to navigate issuer‑level risks, we believe investment‑grade credit can continue to play a critical role for investors in 2026 and beyond.”

About Payden & Rygel

Payden & Rygel is one of the largest privately-owned global investment advisers, managing approximately $169 billion in assets. Founded in 1983, the firm specializes in the active management of fixed income and equity portfolios, serving a diverse range of institutional worldwide. With clients that include central banks, pension funds, foundations, and corporations, Payden & Rygel offers a comprehensive suite of investment strategies through separately managed accounts, US mutual funds, and Irish domiciled funds (subject to investor eligibility). Headquartered in Los Angeles, the firm also maintains offices in Boston, London, and Milan. To learn more, visit www.payden.com.

This material reflects the firm’s current opinion and is subject to change without notice. Sources for the material contained herein are deemed reliable but cannot be guaranteed. This material is for illustrative purposes only and does not constitute investment advice or an offer to sell or buy any security. Past performance is no guarantee of future results.

Media Contact: Kate Ennis, DAI Partners, ennis@daipartnerspr.com, (301)580-6726

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