‘Will I Lose Money?’: Credit Buyers Turn to Breakevens for Clues

With corporate bond spreads offering investors the least compensation for risk in years, some are beginning to look more closely at another metric to justify their buying spree.

The so-called breakeven is a calculation based on yield and duration that shows how much a spread can widen before the bond starts to lose money. And at the moment, with yields relatively high, investors have a bigger cushion to absorb shocks than in prior years.

For many investors looking at the tight spreads right now, the overarching question is: ‘Will I lose money?’, according to Duncan Lamont, an analyst at ...