Today’s low corporate default rate combined with attractive credit spreads and equity valuations provide an attractive climate for convertible securities, according to Putnam’s fundamental research.
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.
There are two main issues at stake in the European debt markets. The first is a short-term liquidity issue: Will these economically troubled European nations have the capital to make the next interest payments on their debts? The answer, for the time being, appears to be yes: Greece, after receiving massive funding infusions, has been
Around the world central bank interest-rate policies have diverged to address different challenges, including the eurozone debt crisis, but efforts in the United States, Europe, and Japan to hold short-term rates low could cause movement in long-term interest rates.
We continue to find a number of reasons for a positive outlook on the high-yield bond sector. First, the long-term average spread in the high-yield market is close to 500 basis points, so today high-yield spreads are at above-average levels. But at the same time, the fundamental backdrop for high-yield corporate bonds continues to be
We believe municipal bond investments are potentially quite attractive: Defaults have remained low, contrary to overblown predictions in the media; spreads are attractive on a historical basis; and muni/Treasury ratios are still above historical averages. Defaults in the municipal bond market are generally misunderstood. While defaults do happen, they occur with far less frequency than