US Investment Grade Best Ideas: Sixteen ways to be different

With broad market valuations increasingly compressed, alpha is becoming a security-selection story. We highlight 16 of our best trade ideas across sectors where funding trends, relative value gaps, ratings trajectories and company-specific developments create opportunities for outperformance. Our strategy team highlights that BBB spreads have compressed to some of the tightest levels since the GFC, with the richest valuations concentrated beyond seven years. As broad market premiums disappear, sector and security selection become increasingly important, with Financial Companies among the few areas still offering meaningful compensation for moving down the ratings spectrum. On the long side, we see 15-25bp of tightening potential across a range of catalyst-driven opportunities, including OCSL new issue bonds, AALLN 2031s/2036s, OVV belly bonds, VTRS 2050s, SPCX 2036s, VST 2035s/2036s, PSD hybrids and PVH $30s. Several ideas are tied to deleveraging, ratings migration, merger execution a