The first half of 2022 has been one to forget, with many corporate bond investments down more than 10% so far

There was nowhere to hide, as even short-term bonds and those with floating coupon rates suffered declines

After the steep drop in prices, yields on many corporate bond investments are at or near their 12-year highs, but we still suggest a maintaining a defensive approach, as risks are rising

Corporate profits are one concern, due to the combination of slowing consumer demand and rising input costs for companies

Rising labor costs may also eat away at profit margins. According to Bureau of Economic Analysis data, which includes public and private companies of all sizes

The rating agencies have been taking notice, and the number of downgrades has begun to pick up for high-yield bond issuer

There was a noticeable uptick in downgrade activity of high-yield-rated issuers over the last two months, with the number of downgrades outpacing the number of upgrades

In 2022, borrowing costs have risen sharply, the corporate profit outlook is poor, and demand may slow