High-Yield and Bank Loan Outlook - April 2015

How high yield bonds and bank loans can help investors position for the Federal Reserve’s upcoming rate tightening cycle.

April 13, 2015

Report Highlights

  • The Credit Suisse High Yield and Leveraged Loan Indices posted positive quarterly returns of 2.6 percent and 2.1 percent in the first quarter 2015, a rebound from two consecutive quarters of negative returns in both sectors.
  • A bullish undertone exists in bank loans, but sentiment in the high-yield corporate bond market remains uneasy heading into the second quarter based on a monthly loss for the high-yield index in March 2015.
  • Investors should expect some volatility ahead as the market appears to be underestimating the full impact of the severe winter on U.S. economic data and Q1 2015 GDP growth.
  • Given lower durations and attractive yields relative to investment-grade corporate bonds and Treasuries, we believe leveraged credit is positioned to outperform in the next Fed tightening cycle.


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