Although expectations are for US interest rates to rise , we expect this to happen at a very gradual pace and it will take years for debt service cost to seeking returns in any market environment .
Luke Farrell , fixed-income investment director and leader of the fixed-income investment specialist team globally , shares his views on valuations within US investment-grade credit . By way of example , if a company ’ s bonds have an average maturity of eight years and they do not have to refinance for the next eight years then their debt service costs should remain constant even as rates rise .
Furthermore , if rates are rising , you would expect that to be associated with a stronger economy and increasing earnings and profits , which in turn would better enable companies to service their debt .