Lessons From a Bond Issued 90 Years Ago

In this episode of "Thoughts on the Market," Andrew Sheets, head of corporate credit research at Morgan Stanley, explores the historical context of Morgan Stanley's first bond issuance 90 years ago, amidst the Great Depression and the implementation of the Glass-Steagall Act. He highlights that a 30-year corporate bond for a AA-rated U.S. utility yielded just 3.55%, only 70 basis points over U.S. Treasury bonds, despite the significant economic uncertainty of the time. Sheets concludes that this historical example demonstrates that high-quality corporate bonds can trade at very low spreads even during uncertain periods, cautioning against prematurely negative views on corporate credit.