Libertad24 - Comercio de valores

In an analysis featured by Finanzas, a Spanish financial news media covering markets and investment trends, Pedro Santa Cruz commented on the current dynamics of the corporate bond market and the risks investors may be underestimating. The update matters as narrowing credit spreads and rising corporate debt levels could shape investment decisions. He notes that investment grade credit spreads have fallen to decade lows despite structurally higher interest rates and increasing refinancing costs for companies. "When money was practically free, taking on debt was a rational decision for many companies. Today, the interest rate regime has changed structurally, but the credit market continues to behave as if that era were not over. This gap between reality and price is precisely where risks accumulate," explains Pedro Santa Cruz, director of Freedom24 IBERIA, S.L., a tied agent of Freedom Finance Europe Ltd. in Spain. 📊 He also highlights how continued demand from institutional investors has supported favourable financing conditions for issuers. "Institutional investors have continued to buy corporate credit with very little discrimination. The result is a market where companies are financing themselves cheaply while their balance sheets operate in a radically different interest rate environment than would justify those valuations," says Pedro. He adds that risks may emerge through rating downgrades rather than defaults. "Imbalances don't give warning. They accumulate silently, and when the market recalibrates risk, it does so suddenly. Today, more than half of investment grade bonds are at BBB, the last step before high yield," warns Santa Cruz. "The real risk is not what we see in prices today. It's the premium that the market has stopped demanding," he concludes. 🔗 Read more on Finanzas