Core Viewpoint - The US investment-grade (IG) credit market is showing signs of recovery after a challenging start to 2021, with opportunities arising from price corrections and attractive yields for investors, particularly those based in Europe [4][6]. Group 1: Market Conditions - In 2020, investment-grade credit was favored due to wider spreads to government bonds and central bank support [3]. - By the end of 2020, rising US Treasury yields and the cessation of the Federal Reserve's buying program led to negative returns and net selling in Q1 2021 [4]. - Recent stability in Treasury yields has created an incentive for investors to reassess their positions in IG credit, as economic and inflation data have shown positive surprises [6]. Group 2: Investment Opportunities - Yields on US IG credit funds are now above 2%, making them attractive compared to similar EUR exposures, which yield around 30 basis points [6]. - The cost of hedging against currency risks is historically low, making US credit investments more favorable for EUR-based investors, with spreads close to 100 basis points being the most favorable since early 2017 [6]. Group 3: ESG Considerations - Recent announcements from the UK and US governments regarding carbon emissions are expected to heighten focus on climate and ESG themes, influencing investment strategies in US IG credit [11]. - There has been a notable trend of European investors moving towards ESG-based investment strategies in US credit over the past year [11]. - The Bloomberg SASB US Corporate ESG Ex-Controversies Select Index excludes companies involved in controversial industries and optimizes for ESG exposure while aligning closely with the broader Bloomberg Barclays US Corporate Index [12][13].

By the ETF research team at State Street Global Advisors.Investment-grade credit was the darling of investors in 2020. Dramatically wider spreads to government bonds, following the March sell-off, coupled with a central bank backstop made IG credit an easy investment choice.However, the positive feelings toward the sector had largely played out by the end of the year. Rising US Treasury yields, the end to the Federal Reserve’s buying program, and little room for further spread compression meant that Q1 2021 ...

Core Insights - Enbridge Inc. (ENB) reports that over 95% of its customers possess an investment-grade credit profile, indicating strong creditworthiness and suggesting stable income for the company [1][7] - The predictable cash flow from long-term contracts with high-credit clients reduces ENB's vulnerability to oil and natural gas price volatility [2][7] - ENB has a history of rewarding shareholders with consecutive dividend increases for three decades, currently offering a dividend yield of nearly 6%, which is higher than the industry average of 5.2% [3][7] Business Model and Stability - ENB's stable business model is supported by long-term contracts and a customer base with high credit ratings, ensuring lower exposure to market fluctuations [2][5] - Other midstream energy companies like Kinder Morgan (KMI) and Enterprise Products Partners LP (EPD) also exhibit stable business models and higher dividend yields compared to the oil-energy sector, with EPD offering a yield of 6.8% [4][5] Financial Performance - ENB's shares have appreciated by 37.6% over the past year, outperforming the industry composite stocks, which saw a 34.9% increase [6] - The company's current valuation shows an enterprise value to EBITDA (EV/EBITDA) ratio of 15.20X, above the industry average of 13.93X [9]