High-Yield and Bank Loan Outlook – April 2016

While spreads have since narrowed, we are still finding bargains in high-yield bonds and bank loans.

April 13, 2016 | By Scott Minerd

Report Highlights

The Credit Suisse High-Yield Bond and Leveraged Loan indexes posted gains of 3.1 percent and 1.3 percent in Q1 2016, respectively, following a rebound across risk assets that began in the middle of the quarter.
Technical headwinds remain. In high-yield, a slew of downgrades may oversupply the market and push spreads higher. Bank loans may see some pressure given their positive correlation with high-yield bonds.
Fundamentally, both markets are performing well. Bank loan borrowers, in particular, may benefit from the Federal Reserve’s decision to delay raising interest rates, keeping borrowing costs at historically low levels.
As 10-year U.S. Treasury yields decline further, loss-adjusted yields in high-yield bonds and bank loans look especially attractive, even when stressed for the level of credit losses experienced during the financial crisis.

Important Notices and Disclosures

This article is distributed for informational purposes only and should not be considered as investing advice or a recommendation of any particular security, strategy or investment product. This article contains opinions of the author but not necessarily those of Guggenheim Partners or its subsidiaries. The author's opinions are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Guggenheim Partners, LLC. ©2016, Guggenheim Partners. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information.

Gaining from the Flight to Quality

Opportunity in Summer Volatility

FEATURED PERSPECTIVES