We evaluate the high-yield market by looking at three key factors: fundamentals, valuation, and “technicals,” or the balance of supply and demand. We are neutral on all three. Looking first at fundamentals, we see an economic landscape marked by countervailing … Continue reading
Posts By: Paul D. Scanlon
Coming out of the financial crisis in 2008–2009, corporations took aggressive steps to shore up their balance sheets and rein in expenses, and today they are running very lean, profitable organizations, with the added benefit of having record levels of … Continue reading
Generous yield spreads and a low default rate on corporate debt give high-yield bonds attractive investment potential in today’s market. Lower-rated bonds may offer higher yields in return for more risk.
A modest pace of economic recovery has helped to keep the corporate default rate below historical averages and provides favorable conditions for high-yield bonds. Lower-rated bonds may offer higher yields in return for more risk.
Amid a moderate economic recovery, cautious spending by corporations may make high-yield securities more attractive as investments.
Spreads on high-yield bonds widened to attractive levels even as the expected corporate default rate has remained subdued.
We believe the sell-off in high-yield bonds actually represents an investment opportunity. Continue reading