Selectivity matters: Finding value across developed-market bonds

Selectivity across developed-market bonds is essential because attractive carry increasingly coexists with issuance, refinancing and leverage risks.

• Hyperscaler bond issuance is expanding beyond the US: Alphabet issued a 100-year GBP bond earlier in 2026, while Amazon issued GBP 4.25 billion across several maturities in early September.
• Investors should adjust credit analysis for data-center lease commitments, which can create significant debt-like obligations and raise future lease-adjusted leverage even though hyperscalers currently have strong margins, robust free cash flow and historically low leverage.
• September’s high-yield repricing was driven more by rate volatility and heavy supply than by a broad deterioration in fundamentals: US HY OAS widened 50 basis points to 324 basis points, while EBITDA growth was 9.0% year over year versus 3.1% debt growth, with net leverage at 3.62x and interest coverage at 4.26x.
• A USD 52 billion media and entertainment M&A financing temporarily drained secondary-market liquidity, while CCC spreads exceeded 1,200 basis points; Cable, Telecoms and Real Estate returned -4.22%, -3.44% and -3.04% in September, respectively.
• Swiss bonds offer lower yields but defensive qualities: Swiss government debt was CHF 353 billion, or 40.7% of GDP, in 2025, the public sector recorded a CHF 4 billion surplus, and the Swiss Bond Index outperformed the CHF-hedged Bloomberg Global Aggregate Index by more than 9% over three years.

Takeaway: Investors should seek carry in high-quality, free-cash-flow-generative issuers while avoiding refinancing-dependent and deeply distressed credits; Swiss bonds remain relevant as a defensive CHF anchor despite their low nominal yields, although foreign markets offer more carry and their relative returns depend on inflation, monetary policy and fiscal risk.