High-Yield and Bank Loan Outlook: Tight Spreads Call for Caution - Title Image

High-Yield and Bank Loan Outlook: Tight Spreads Call for Caution

We expect investors to harvest gains unless we see more concrete legislative progress on fiscal policy in Washington.

April 17, 2017


The faith-based rally that kicked off 2017 lost steam in March as investors’ expectations for fiscal easing were marked to market. As “Trump trades” continue to unwind, and the Federal Reserve (Fed) raises rates further to contend with a tightening labor market, we expect to see investors take more chips off the table unless we see more concrete legislative progress on fiscal policy in Washington. Given that high-yield bonds spreads have been tighter only 34 percent of the time since 1986, the sector appears vulnerable to spread-widening.

Bank loans continue to look more attractive than high-yield corporate bonds, offering 50 basis points higher yields when measured to maturity. However, yield-to-maturity measures can be misleading in periods of high refinancing volumes, as refis reduce issuers’ borrowing costs at the expense of investors’ spread income. In this report, we discuss our approach to adjusting yield expectations and managing risk amid elevated loan refinancings.

Report Highlights

  • The primary issuance market is witnessing a strong resurgence in activity, but refinancing makes up the lion’s share. Combining high-yield corporate bond and institutional leveraged loan issuance, refinancing volume represented 52 percent and 66 percent of total new issue activity in 2016 and the first quarter of 2017, respectively, compared to the 10-year average of 43 percent.
  • Borrowers shaved roughly 90 basis points from contractual spreads through refinancing transactions in the first quarter, effectively lowering investors’ spread income. This is something investors should factor into yield expectations going forward.
  • Even with adjusted return expectations, bank loans look more attractive than high-yield corporate bonds due to their higher position in the capital structure, their floating coupons, and their lower spread durations.
  • In this report we discuss our approach to adjusting yield expectations and managing risk amid elevated loan refinancings.
 

Leveraged Credit Scorecard

As of 3.31.2017

 

High-Yield Bonds

High-Yield Bonds

 

Bank Loans

Bank Loans

Credit Suisse High-Yield Index Returns

Credit Suisse High-Yield Index Returns

Source: Credit Suisse. Data as of 3.31.2017. Past performance is not indicative of future results

Credit Suisse Leveraged Loan Index Returns

Credit Suisse Leveraged Loan Index Returns

Source: Credit Suisse. Data as of 3.31.2017. Past performance is not indicative of future results.

Macroeconomic Overview

Marking Investor Expectations to Market

The animal spirits that helped lift risk asset prices after the presidential election in November continued through the early part of 2017. The S&P 500 index set a new record, high-yield corporate bond spreads approached cycle lows, and the 10-year Treasury yield rose to 2.63 percent—the highest level since 2014. Risk appetite faded as the first quarter drew to a close, however, as investors grappled with the implications of the intra-party fight over the Republican healthcare reform bill, which failed to make it to the House floor.

A number of “Trump trades” unwound as troubles in Washington became more evident. The U.S. trade-weighted broad dollar index, which measures the U.S. dollar relative to the currencies of major U.S. trading partners, retraced most of its 5.1 percent gain seen in the weeks following the election. The S&P 500 index ended the quarter 1.5 percent below its recent historical peak, and high-yield corporate bond spreads widened by 71 basis points from levels at the beginning of March. Overall, price action indicated a more cautious tone among investors leading into the second quarter of 2017.

The focus has shifted to the prospects for tax reform as investors mark down their expectations for fiscal easing. The failure to pass a healthcare bill will make enacting meaningful tax reform more difficult, both for budgetary and political reasons. Indeed, the post-election outperformance of S&P 500 index constituents with the highest effective tax rates had faded by late March. Nevertheless, we think the global economy remains on solid footing, and U.S. fiscal easing continues to represent an upside risk to the growth outlook, particularly in 2018.

Tracking estimates for first-quarter real gross domestic product (GDP) growth have fallen in recent weeks despite strong gains in consumer and business sentiment since the election. As of March 31, the Atlanta Fed’s GDPNow model estimated first-quarter GDP growth of just 0.9 percent. We attribute a large portion of the apparent weakness to seasonal factors that have depressed as-reported first quarter GDP growth over the past several years. In keeping with this pattern, we would expect the final first-quarter GDP number to be revised higher. More importantly, the prospects for quarterly U.S. GDP growth appear stronger going forward.

Consumer spending should benefit from solid income and wealth gains, with household net worth sitting at an all-time high. Recent job gains have been strong, and we anticipate a further acceleration of wage growth as the labor market continues to tighten. Buoyant consumer sentiment and low household debt service outlays also support our positive outlook. On the business investment side, we expect various factors to be supportive, including the uptick in global industrial production growth, the ongoing rise in U.S. oil drilling activity, the surge in small-business optimism, and the recovery in corporate earnings.

Tax Reform Optimism Has Faded

The failure to pass a healthcare bill will make enacting meaningful tax reform more difficult, both for budgetary and political reasons. Indeed, the post-election outperformance of S&P 500 index constituents with the highest effective tax rates had faded by late March. Nevertheless, we think the global economy remains on solid footing, and U.S. fiscal easing continues to represent an upside risk to the growth outlook, particularly in 2018.

Indexed to 100 on Election Day (11.8.2016)

Tax Reform Optimism Has Faded

Source: Guggenheim Investments, Bloomberg, Goldman Sachs, Federal Reserve Board. Data as of 3.31.2017.

On March 15, the Federal Open Market Committee (FOMC) raised the fed funds target rate by 25 basis points to a range of 0.75–1.0 percent. The hike itself had little impact on markets because several FOMC members, including Chair Janet Yellen and New York Fed President William Dudley, had indicated in the weeks leading up to the meeting that a hike was likely. Looking ahead, we believe that the market is underpricing the likely pace of Fed rate hikes in 2017 and 2018, particularly now that market optimism about fiscal stimulus is waning.

Importantly, Chair Yellen noted that the FOMC’s baseline forecast of two additional rate increases in 2017 and three more in 2018 was not conditioned on expectations for fiscal stimulus. Rather, it reflected a need to gradually remove accommodation due to the fact that the Fed has essentially achieved its dual mandate objectives for employment and inflation. Fiscal easing, she explained, could result in a faster pace of tightening, if it materializes. Markets are skeptical and are pricing in only 1.5 more rate hikes in 2017 and another 1.5 rate hikes in 2018, according to fed funds futures contracts. We expect that the Fed will deliver three more rate hikes in 2017 and another four in 2018.

We expect to see equity and credit investors take more chips off the table unless there is concrete progress on fiscal legislation in Washington, particularly as the Fed demonstrates its desire to tighten even without fiscal stimulus. While we are optimistic about the near-term U.S. economic outlook, current valuations and growing political risks warrant a more defensive stance.

 

Q1 2017 Leveraged Credit Performance Recap

The post-election credit rally continued in January and February, but was followed by a mixed tone in March. The Credit Suisse High-Yield index spread tightened to 418 basis points, only 30 basis points above the cyclical low, before reversing. Initially, spreads were driven wider by declining oil prices and a few struggling high-profile names in the retail sector. Eventually spread widening broadened to other sectors as investors priced in the potential for less fiscal stimulus than they anticipated at the start of the year.

Despite both sectors delivering negative returns in March, full-quarter total returns were 2.4 percent for high-yield corporate bonds and 1.2 percent for bank loans. High-yield corporate bond spreads tightened by 22 basis points quarter over quarter, ending March at 450 basis points. Bank loan three-year discount margins tightened by 17 basis points to end the quarter at 444 basis points.

High-Yield Corporate Bond Spreads Near Cycle Low

The Credit Suisse High-Yield index spread tightened to 418 basis points, only 30 basis points above the cyclical low, before reversing. High-yield corporate bond spreads tightened by 22 basis points quarter over quarter, ending March at 450 basis points.

High-Yield Corporate Bond Spreads, Historical Low, and Cycle Low
High-Yield Corporate Bond Spreads Near Cycle Low

Source: Credit Suisse, Guggenheim Investments. Data as of 3.31.2017.

Primary market activity surged in the first quarter amid improved sentiment and strong demand for riskier bonds. U.S. institutional leveraged loan issuance volume totaled $169 billion, up 316 percent from the first quarter of 2016, and above the previous quarterly record of $149 billion set in the first quarter of 2013, according to S&P LCD. The U.S. high-yield market rebounded similarly, with $81 billion of issuance volume during the first quarter, up 125 percent from the $36 billion seen in the first quarter of 2016.

Borrowers Opportunistically Cutting Borrowing Costs via Refinancing

Refinancing historically averages 43 percent of total new-issue volume across high-yield corporate bonds and bank loans. In 2016 and the first quarter of 2017, however, it totaled 52 percent and 66 percent of volume, respectively. Issuers in oil and gas, services and leasing, and cable industries represented a combined 32 percent of all refinancing volume since January 2016.

Refinancing Volume as a Share of Total Leveraged Credit* Issuance

Borrowers Opportunistically Cutting Borrowing Costs via Refinancing

Source: S&P LCD, Guggenheim Investments. *Only institutional leveraged loans and high-yield corporate bonds are included in leveraged credit issuance. Data as of 3.31.2017.

These exceptional new issuance volumes were driven by a resurgence in refinancing activity as borrowers opportunistically reduced the cost of debt outstanding. The significant increase in refinancing activity in 2016 and early 2017 contrasted with the previous three years, which saw consecutive declines in the refinancing share of total new issue volume. Refinancing historically averages 43 percent of total new-issue volume across high-yield corporate bonds and bank loans. In 2016 and the first quarter of 2017, however, it totaled 52 percent and 66 percent of volume, respectively. Issuers in oil and gas, services and leasing, and cable industries represented a combined 32 percent of all refinancing volume since January 2016.

Refinancing activity and strong demand from institutional investors and mutual funds have pushed yields much lower, particularly for high-yield bonds. As of the end of March, high-yield corporate bonds yielded 50 basis points less than loans, compared to an average spread over loans of 110 basis points between 1992 and 2016. In light of this relative value proposition, we favor loans over high-yield corporate bonds. Loans’ seniority in the capital structure and secured status also make them attractive, as we have noted in past reports. We also favor bank loans’ floating coupons, which are benchmarked to the three-month London Interbank Offered Rate (Libor), since we believe that Libor will rise more quickly than markets are pricing in. Nevertheless, loan investors must be mindful of elevated call risk in light of heavy refinancing activity.

Refinancing risk can be managed more easily in bonds, as they are often quoted on a yield-to-worst basis, allowing investors to set appropriate return expectations. High-yield bonds also have better call protection than loans—typically five years at issuance. In contrast, loans can be called at any time, though issuers pay a small premium if they are called within the call protection period.

We believe refinancing activity will be a key performance driver in the bank loan market in 2017, and potentially into early 2018. Given that call activity generally reduces the spread over Libor an investor earns on the loan, adjustments should be made to current spreads and return expectations over the next five to seven years.

Drivers of Refinancing Activity

A refinancing transaction occurs when a loan issuer retires an existing loan with proceeds of a new loan issued in the primary market. This is typically motivated by the issuer’s ability to reduce borrowing costs due to an improvement in market conditions. Refis can be accompanied by other changes to the loan terms, such as an elimination of a Libor floor, an extension of the life of the loan, or an increase in the size of the facility. Refinancing activity rises when loans trade above par in the secondary market, as this implies that investors are willing to accept a lower yield than when the loans were issued. These conditions are prevalent in today’s market.

Loans are often quoted based on a yield to maturity or a three-year yield, which assumes that the loan will be refinanced in three years. If the loan is trading at a discount, the yield includes gains expected to occur as the loan price converges to par. In our view, a theoretical three-year yield estimate seems unrealistic in the current environment given that the average life of loans repriced since the second quarter of 2016 was only 17 months.

Newly originated loans now typically carry six–12 months of soft call protection, which means the borrower must pay a premium—often 1 percent, but sometimes 2–3 percent of the par value—to voluntarily call the loan within the protection period. Given this limited protection, investors should look to the primary market first in search of attractive loan opportunities before risking paying above par in the secondary market. However, primary market issuance has not been strong enough to meet the incremental demand from collateralized loan obligation (CLO) originations and bank loan mutual fund inflows. S&P LCD data indicate that the shortage of institutional loan supply has totaled $84 billion since the second quarter of 2016, an average of $7 billion per month. This has pushed buyers into the secondary market.

With the backdrop of insufficient primary market supply relative to visible inflows, buyers become price takers from sellers in the secondary market. The Loan Syndications & Trading Association reported that the median price of secondary loan trades exceeded 100 percent of par in September 2016 and has remained above that level ever since. Strong investor demand has resulted in over 70 percent of loans in the Credit Suisse Leveraged Loan index being quoted at prices above par as of the end of March.

Approximately 40 percent of loans in the Credit Suisse Leveraged Loan Index maturing after 2017 are no longer call-protected. Of those loans for which we could obtain a price, 47 percent were trading above par, and 8 percent were trading above 101 percent of par, putting the call option in the money (meaning the loan’s price was above the strike price of the call option). If the borrower calls the loan at some point this year, a recent buyer might clip a coupon or two but would lose the premium paid. Any reinvested proceeds would subsequently be invested in the new loan at a lower spread. Market forces may cause the new loan to also trade at a premium above par, as has been the case recently, but this outcome should not be expected.

Demand Outpaced Supply Over the Past Year

With the backdrop of insufficient primary market supply relative to visible inflows, buyers become price takers from sellers in the secondary market. The Loan Syndications & Trading Association reported that the median price of secondary loan trades exceeded 100 percent of par in September 2016 and has remained above that level ever since. Strong investor demand has resulted in over 70 percent of loans in the Credit Suisse Leveraged Loan index being quoted at prices above par as of the end of March.

Change in Outstanding Loans and Visible Flows

Demand Outpaced Supply Over the Past Year

Source: S&P LCD. Data as of 2.28.2017.

Loan Market Could See as Much as 45% Outstanding Refinanced This Year

Our research finds that during periods of exceptionally high refinancing activity as much as 45 percent of outstanding loans (by par value) have been refinanced. Should current trends continue—and we expect they will—we could see as much as $352 billion of refinancing volume in the loan market alone by the end of 2017.

Total Loan Refinancing Volume and as a Share of Loans Outstanding
Loan Market Could See as Much as 45%25 Outstanding Refinanced This Year

Source: Credit Suisse, S&P LCD. Data as of 3.31.2017.

Our research finds that during periods of exceptionally high refinancing activity as much as 45 percent of outstanding loans (by par value) have been refinanced. Should current trends continue—and we expect they will—we could see as much as $352 billion of refinancing volume in the loan market alone by the end of 2017.

Investment Implications

Refinancing activity is ultimately a credit-positive trend when the loan size remains unchanged. The probability that the borrower will default declines as their borrowing cost declines, all else equal, which in turn should help push a default cycle further out into the future. However, we believe investors must manage this risk and adjust return expectations lower.

As a first defense in managing call risk, we constantly evaluate a universe of loans for the likelihood that they will be called soon. As part of Guggenheim’s extensive credit coverage, we monitor loans that are trading above their call price and those nearing the end of their call protection period. More nuanced, issuer-specific reasons might cause a borrower to choose to not refinance a loan, which is information we glean from having long-term ongoing coverage on a particular credit or issuer.

The best line of defense would be to avoid buying a loan at a premium, but this is unrealistic when 70 percent of the universe is trading above par. As a result, investors must adjust return expectations. When a loan is refinanced, the existing loan investor is typically given the option to roll into the new loan. The worst case scenario would be that the loan is taken out by a bond, and the investor’s investment guidelines prohibit rolling the proceeds into the bond. In this case, the investor may earn a negative total return if the loan was purchased above par and it was held for a short period. This scenario is rare, but it happens often enough to note.

Most investors roll into the new loan but must accept a lower spread. In setting more realistic return expectations in this case, a straightforward approach would be to adjust the average loan index spread down by the average contractual spread reduction in recent transactions multiplied by the share of loans we can expect might be refinanced this year.

For example, the average loan contractual coupon was Libor plus 390 basis points as of March 31. A representative portfolio pays roughly this coupon. The average refinancing transaction reduced the contractual spread over Libor by 90 basis points, but not every loan will be refinanced in a portfolio. As we mentioned earlier, 45 percent of all loans were refinanced at the height of a refinancing wave. As such, when calculating expected yields, investors holding a representative portfolio should adjust the spread down by about 41 basis points, which is the average spread reduction of 90 basis points multiplied by the share of loans that might be refinanced. Combining this adjustment with an expected path for Libor would yield a more realistic return projection.

Libor increases should help to offset the spread reduction resulting from refinancing activity, though this is not a foregone conclusion, of course. As mentioned earlier in the report, we currently expect that the Fed will raise rates three more times in 2017 (for a total of four), putting Libor at around 1.90 percent by year end. This means the rise in Libor will offset the reduction in spread income for refinancing activity over the next 12 months under our assumptions, which should support a rise in coupon income. Therefore, despite this high call risk, we continue to expect loans will outperform bonds in the coming years as coupons rise from the Fed raising short-term interest rates.

Spreads Tend to Widen at this Stage of the Business Cycle

Spreads tend to widen at this point in the business cycle, as this chart shows. Industries where we continue to see opportunities include technology, communications, and energy, albeit to a more limited extent. But given tight spreads, an aging credit cycle, and high level of policy uncertainty, we would prefer to buy into weakness.

Credit Suisse High-Yield Index Bond Spreads vs. Months Following End of Recession
Liquidity from Traditional Providers Has Declined

Source: Credit Suisse, Guggenheim Investments. Data as of 3.31.2017.

We maintain a selective approach to opportunities in the high-yield corporate bond market, as spreads are tight relative to historical levels. Our internal credit spread dashboard, which monitors spreads in fixed-income sectors on a time-weighted percentile basis, indicates that high-yield corporate bonds have traded at tighter spreads only 34 percent of the time, with BB-rated and B-rated bonds being even richer than the index. This makes us more cautious when deploying capital. Moreover, spreads tend to widen at this point in the business cycle, as the chart above shows. Industries where we continue to see opportunities include technology, communications, and energy, albeit to a more limited extent. But given tight spreads, an aging credit cycle, and high level of policy uncertainty, we would prefer to buy into weakness.

In reality, the forward curve may already price in some rise in bond yields in the future, and gains from rolling down the yield curve would offset some losses. Incorporating bond convexities would result in a more accurate illustration of bond price movements. Nonetheless, our hypothetical example demonstrates that yield curve positioning can be as impactful as duration when the yield curve is flattening.

In practice, we currently find long-dated taxable municipal bonds to be attractive at the long end of a barbell strategy. They typically offer higher yields than long-dated Treasurys and provide similar duration exposure. Since Donald Trump’s election as president, elevated market uncertainty regarding the federal budget, infrastructure initiatives, healthcare policy, and tax reform has weighed on the municipal market, resulting in some cheapening of municipal bonds relative to Treasurys. Notwithstanding increased policy uncertainty, we still find value in AA and A-rated special tax and monopolistic utility revenue bonds. Like other sectors that have historically carried greater credit risk, we follow a credit intensive approach when selecting municipal securities.

The Future of Core Fixed Income Management

We believe that the surest path to underperformance is to remain anchored to outdated core fixed-income conventions. Traditional core strategies are overly confined to a benchmark that no longer accurately reflects all of the investment options that exist in today’s fixed-income landscape. As such, they restrict portfolios from reallocating toward more attractive opportunities that have emerged as a result of the evolution of U.S. capital markets.

Taking the easy path of bearing greater credit or interest-rate risk to generate incremental yield today may come at the expense of future returns. The accommodative policy stances of major central banks may continue to foster a benign credit environment in the near term, but we believe they are also likely resulting in a general underappreciation of investment risks.

With the chasm between investors’ income targets and benchmark yields likely to persist, traditional views of core fixed-income management need to adapt. Achieving yield targets while maintaining a high-quality portfolio is possible, but it requires a willingness to look beyond the benchmark. In our view, investors must gravitate to sectors where value remains unexploited. This approach demands significantly more credit expertise and ongoing diligence, but it may offer the prospect of superior risk-adjusted returns over time.

Important Notices and Disclosures

INDEX AND OTHER DEFINITIONS

The referenced indices are unmanaged and not available for direct investment. Index performance does not reflect transaction costs, fees or expenses. The Credit Suisse Leveraged Loan Index tracks the investable market of the U.S. dollar denominated leveraged loan market. It consists of issues rated “5B” or lower, meaning that the highest rated issues included in this index are Moody’s/S&P ratings of Baa1/BB+ or Ba1/ BBB+. All loans are funded term loans with a tenor of at least one year and are made by issuers domiciled in developed countries. The Credit Suisse High-Yield Index is designed to mirror the investable universe of the $US-denominated high yield debt market. The S&P 500 Index is a capitalization-weighted index of 500 stocks, actively traded in the U.S., designed to measure the performance of the broad economy, representing all major industries. A basis point (bps) is a unit of measure used to describe the percentage change in the value or rate of an instrument. One basis point is equivalent to 0.01%. Beta is a measure of the volatility, or systematic risk, of a security or a portfolio, in comparison to the market as a whole. A call option is an agreement that gives an investor the right, but not the obligation, to buy a stock, bond, commodity or other instrument at a specified price within a specific time period. Contractual spread is the fixed spread over Libor agreed to in the loan terms, ignoring trading prices and expected life of the loan expressed in discount margins. The three-year discount margin to maturity (dmm), also referred to as discount margin, is the yield-to-refunding of a loan facility less the current three-month Libor rate, assuming a three year average life for the loan. The London Interbank Offered Rate (Libor) is a benchmark rate that a select group of banks charge each other for unsecured short-term funding. Spread is the difference in yield to a Treasury bond of comparable maturity. A strike price is the price at which a specific derivative contract can be exercised. Yield to maturity is the estimated rate of return based on the assumption that a bond is held until its maturity date and not called.

RISK CONSIDERATIONS
Fixed-income investments are subject to credit, liquidity, interest rate and, depending on the instrument, counter-party risk. These risks may be increased to the extent fixed-income investments are concentrated in any one issuer, industry, region or country. The market value of fixed-income investments generally will fluctuate with, among other things, the financial condition of the obligors on the underlying debt obligations or, with respect to synthetic securities, of the obligors on or issuers of the reference obligations, general economic conditions, the condition of certain financial markets, political events, developments or trends in any particular industry and changes in prevailing interest rates. Investing in bank loans involves particular risks. Bank loans are generally below investment grade and may become nonperforming or impaired for a variety of reasons. Nonperforming or impaired loans may require substantial workout negotiations or restructuring that may entail, among other things, a substantial reduction in the interest rate and/or a substantial write down of the principal of the loan. In addition, certain bank loans are highly customized and, thus, may not be purchased or sold as easily as publicly-traded securities. Any secondary trading market also may be limited, and there can be no assurance that an adequate degree of liquidity will be maintained. The transferability of certain bank loans may be restricted. Risks associated with bank loans include the fact that prepayments may generally occur at any time without premium or penalty. High-yield debt securities have greater credit and liquidity risk than investment grade obligations. High-yield debt securities are generally unsecured and may be subordinated to certain other obligations of the issuer thereof. The lower rating of high-yield debt securities and below investment grade loans reflects a greater possibility that adverse changes in the financial condition of an issuer or in general economic conditions, or both, may impair the ability of the issuer thereof to make payments of principal or interest. Securities rated below investment grade are commonly referred to as “junk bonds.” Risks of high-yield debt securities may include (among others): (i) limited liquidity and secondary market support, (ii) substantial market place volatility resulting from changes in prevailing interest rates, (iii) the possibility that earnings of the high-yield debt security issuer may be insufficient to meet its debt service, and (iv) the declining creditworthiness and potential for insolvency of the issuer of such high-yield debt securities during periods of rising interest rates and/ or economic downturn. An economic downturn or an increase in interest rates could severely disrupt the market for high-yield debt securities and adversely affect the value of outstanding high-yield debt securities and the ability of the issuers thereof to repay principal and interest. Issuers of high-yield debt securities may be highly leveraged and may not have available to them more traditional methods of financing. 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. This article is distributed for informational purposes only and should not be considered as investment advice, a recommendation of any particular security, strategy or investment product, or as an offer of solicitation with respect to the purchase or sale of any investment. This article should not be considered research nor is the article intended to provide a sufficient basis on which to make an investment decision. The article contains opinions of the author but not necessarily those of Guggenheim Partners, LLC, its subsidiaries, or its affiliates. Although the information presented herein has been obtained from and is based upon sources Guggenheim Partners, LLC, believes to be reliable, no representation or warranty, express or implied, is made as to the accuracy or completeness of that information. 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 is not guaranteed as to accuracy. This article may be provided to certain investors by FINRA licensed broker-dealers affiliated with Guggenheim Partners, LLC. Such broker-dealers may have positions in financial instruments mentioned in the article, may have acquired such positions at prices no longer available, and may make recommendations different from or adverse to the interests of the recipient. The value of any financial instruments or markets mentioned in the article can fall, as well as rise. Securities mentioned are for illustrative purposes only and are neither a recommendation nor an endorsement. Individuals and institutions outside of the United States are subject to securities and tax regulations within their applicable jurisdictions and should consult with their advisors as appropriate.


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