July 13 (Bloomberg) -- Lehman Brothers Holdings Inc., the biggest underwriter of mortgage bonds, Bank of America Corp. and Barclays Capital say the worst of the global credit market rout is over for now and investors should buy investment-grade debt. ``Much of the pain has been squeezed out,'' Lehman's London- based credit strategist David Brickman said in an interview. ``There may be some aftershocks but investors are showing a willingness to take exposure to investment-grade credit.'' Banks and hedge funds triggered the biggest daily increase in risk premiums for European investment-grade debt in at least three years this week by buying credit-default swaps to offset potential losses. The ``worst of the hedging process is behind us,'' Brickman said in a report earlier today. Bank of America, the second-largest U.S. bank, recommends clients increase corporate credit risk in Europe and the U.S. Paris-based Societe Generale SA, France's second-biggest bank, also advises boosting investment-grade debt because the sell-off went ``too far.'' ``This isn't a market meltdown for credit,'' Robert McAdie, global head of credit strategy at Barclays in London, said in an interview. ``Investment-grade fundamentals remain strong, so at the moment it's a safe haven.'' Leveraged Buyouts Barclays recommends boosting investment-grade debt in Europe and the U.S., with the exception of home builders and companies prone to leveraged buyout speculation. Debt rated BBB-or higher by Standard & Poor's and Baa3 by Moody's Investors Service is considered investment grade. Companies have ``strong'' cash reserves and the default rate is near the lowest on record, New York-based Lehman said in its report. Any deterioration in credit quality is likely to be ``gradual.'' Lehman recommends investors bet on credit quality improving by selling credit-default swaps. Five-year contracts based on 10 million euros ($13.8 million) of debt included in the benchmark iTraxx Europe Series 7 index of 125 investment-grade companies traded at 29,000 euros in London today after reaching a high of 35,000 euros July 11. Lehman is targeting a drop in the index to 26,000 euros. Credit-default swaps on $10 million of debt in the CDX North America Investment Grade Index of 125 companies fell $2,500 to $43,000 at 4:41 p.m. in New York, according to broker Phoenix Partners Group. `Long-Term Bearish' While Bank of America recommends increasing corporate credit in the short term, the Charlotte, North Carolina-based bank is ``longer-term bearish,'' Jeff Rosenberg, a New York-based analyst at the bank, said in a July 11 report. BNP Paribas SA, France's largest bank, based in Paris, and Frankfurt-based Dresdner Kleinwort AG said in reports today that the turmoil in the U.S. subprime market will worsen, and that the impact will spread to other parts of the economy. Investors use credit-default swaps to speculate on the ability of companies to repay debt. Prices for the contracts rise as the perception of credit quality deteriorates, and fall as creditworthiness improves. Banks and hedge funds say it's cheaper and easier to use credit-default swaps than buying or selling the underlying securities. Investors sell the contracts based on the index as proxy for buying the underlying debt.