Analyzing Credit Strategies in Fixed Income Portfolios

As a fixed income portfolio manager at a global investment firm, you are responsible for managing a diversified bond portfolio with a focus on credit strategies. The firm has recently become concerned about potential economic downturns and their impact on credit quality across various sectors.

You are tasked with analyzing ten different corporate bonds across various sectors including industrials, financials, and healthcare. Each bond is rated by a major credit rating agency and has different coupon rates, maturities, and yields. Your analysis should address the following:

• The impact of rising default risk due to a potential recession on the credit quality of the selected bonds.
• Your recommendations on which bonds to hold, sell, or increase exposure to, based on credit spreads and relative value assessments.
• The potential advantages and disadvantages of using credit derivatives (such as credit default swaps) as part of your credit strategy to hedge against non-investment grade bonds in the portfolio.

Support your recommendations with relevant quantitative metrics (e.g., credit spreads, yield-to-worst) and qualitative assessments of the sectors and companies in question.