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].

Group 1 - Investment-grade (IG) credit was favored by investors in 2020 due to wider spreads to government bonds and central bank support, making it an attractive investment choice [3] - By the end of 2020, positive sentiment towards IG credit diminished as 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] - Despite risks from inflation, the spread compression between US Treasuries and German Bunds indicates a shift by investors towards higher-yielding US assets [5] Group 2 - Treasury yields have stabilized, prompting investors to reassess their positions in IG credit, which now offers yields above 2%, appealing particularly to EUR-based investors [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 advantageous since early 2017 [6] - Recent announcements on carbon emissions by the UK and US governments are expected to heighten focus on climate and ESG themes, influencing investment strategies in US IG credit [11] Group 3 - The SPDR Bloomberg SASB US Corporate ESG UCITS ETF provides exposure to investment-grade, fixed-rate, US dollar-denominated corporate bonds while excluding controversial industries [9] - The index is optimized to maximize ESG exposure while aligning sector weights closely with the Bloomberg Barclays US Corporate Index, minimizing tracking error for investors transitioning to ESG-compliant funds [13] - The trend of European investors moving towards ESG-based investment strategies in US credit highlights the growing importance of ESG considerations in investment decisions [11]

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]