"Although fear has gripped the markets in recent months, the comparisons with the dark days of 2007/08 are misguided," he explained.
"Across the investment grade spectrum net leverage has been cut by 40 to 65 per cent, interest coverage has more than doubled and free cash-flow-to-debt ratios have increased by as much as 200 per cent over the last few years."
"In recent years, the highest five-year cumulative default rate for investment grade corporates was 2.43 per cent in 1986; however, the market is now pricing in a 16 per cent five-year cumulative default rate, which is more than five times higher and highlights the considerable cheapness in the investment grade space."
Akel, who also manages the GLG Gilt fund, says the case for investment grade corporate bonds is strong relative to government debt, which he believes is far more risky.
Investors have continued to pile into ‘safe haven’ government debt, which has consequently driven down yields to historic lows. However, since governments are allowing their debt levels to rise, Akel says the risk of default is also rising.
He commented: "The corporate credit yield premium over sovereigns is not only attractive but effectively a ‘risk free’ bonus."
"After all, it is difficult to justify investing in AAA-rated government debt with yields at an all-time low, when BBB-rated corporate bonds offer yields of three or four times greater magnitude along with very low default risk."
The GLG Global Corporate Bond fund, which Akel manages alongside Galia Velimukhametova, currently has 49.8 per cent of its portfolio invested in BBB-rated bonds.
A-rated bonds are Akel’s second biggest weighting, making up 21.5 per cent of the fund.
According to FE Analytics data, the investment grade-focused portfolio has returned 43.07 per cent in the last three years, outperforming the average fund in the IMA Global Bonds sector by 8.18 per cent.
Performance of fund vs sector over 3-yrs
Source: FE Analytics
For those considering high-yield bonds, Akel says investors must accept greater volatility and a much higher default risk. In addition, an economic backdrop characterised by low or stagnant growth could potentially create a difficult environment for high yield issuers.
He commented: "Invariably, these companies have businesses that are domestically or regionally oriented and therefore lack the diversified earnings streams of the typical investment grade multi-national."
"Moreover, banks typically seek to reduce the size of their balance sheets in an economic slowdown and this is likely to restrict the availability of credit to lower-rated corporate issuers."