BA/ML corporate bond analyst Yuri.....>

US CORPORATES: BA/ML corporate bond analyst Yuri Shchuchinov quipped "the world

is flat" and noted US "corporate yield curves are now the flattest since 2009,

driven in recent weeks by significant flattening of Treasury yield curves, as

the rate hiking cycle appears intact while the lack of inflation and corporate

supply anchor the long end.:

- He adds this Tsy curve flattening "represents the biggest near-term risk to

our spread curve flatteners, as the extra benefit from reaching out the curve

diminishes and back-end buyers tend to be yield sensitive."

- But he still favors flatteners over the medium term as "first, foreign demand

is concentrated in the back end of the curve due to the higher yields available

to offset high currency hedging costs. Second, the potential for lower tax rates

next year creates an incentive for companies to make contributions to their

pension plans this year and derisk, which shifts pension assets into the long

end. Third, overseas cash repatriation implies less supply out the curve, the

tendering of off-the-run 30-year bonds and less demand for shorter maturities."