/institutional/perspectives/sector-views/high-yield-and-bank-loan-outlook---april-2016

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.
 

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VIDEOS AND PODCASTS

Fed Day: The Argument for 100 Basis Points 

Fed Day: The Argument for 100 Basis Points

Scott Minerd, Guggenheim Partners Global CIO and Chairman of Guggenheim Investments, joins Bloomberg TV on Fed Day.

Macro Markets Podcast 

Macro Markets Podcast Episode 25: Fixed-Income Pain Giving Way to Opportunity

Anne Walsh, Chief Investment Officer for Fixed Income, on the economic and credit cycle, and on risk and opportunity across the fixed-income landscape.







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