Vanguard Eyes Non-US Markets to Hedge High-Grade Debt Exposure

Vanguard is looking at overseas markets to help hedge exposure to US investment-grade corporate debt, as elevated valuations and expectations of higher supply leave the market vulnerable to repricing if conditions unexpectedly weaken.

This year has seen a record start to bond sales both in the US and globally, and analysts and investors alike are expecting a rush of issuance by so-called hyperscalers to fund massive capital-spending plans. Meanwhile, spreads for high-grade notes are historically tight amid strong demand.

But a sudden change in economic conditions could make absorbing anticipated debt sales more challenging, said Arvind Narayanan ...