The merits of sterling credit
In this video, Insight Investment senior portfolio manager Damien Hill explains why he is seeing more opportunities in UK rather than global credit, highlighting areas of the market and sectors he views as attractive and why.
5:46 min Watch
Published on 15 July 2025
Key points:
- UK credit offers relatively attractive yields per unit of interest rate risk compared with global investment grade.
- Utilities is an appealing sector due to historically cheap valuations, improving regulation, elevated spreads, and insulation from trade war uncertainties.
- High-quality senior banking bonds remain fundamentally strong with robust balance sheets, though lower quality and equity-like bank bonds are less attractive.
- Single A-rated UK investment grade credit is favoured over triple B, supported by slowed flows from traditional buyers like defined benefit pension schemes and insurers.
- Sterling credit exhibits significant spread dispersion, especially in high yield and lower investment grade bonds, presenting potential mispricing opportunities.
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