/institutional/perspectives/sector-views/high-yield-and-bank-loan-outlook-january-2015

High-Yield and Bank Loan Outlook - January 2015

While the U.S. economy remains strong, equity and credit markets are becoming increasingly susceptible to certain macro-driven risks, such as the decline in oil prices. Plunging oil prices have dimmed the outlook for the energy sector and have caused spread widening across investment-grade and high-yield U.S. fixed-income assets. While we believe risk of defaults in energy is limited in the near term, now is the time to monitor significant exposures that may cause underperformance in potentially worst-case scenarios.

January 07, 2015    |    By Guggenheim Partners

Report Highlights

  • Volatility in leveraged credit markets continued through the end of the year, with the Credit Suisse High-Yield and Leveraged Loan Indexes posting a loss of 1.6 percent and 0.4 percent in the fourth quarter, respectively.
  • While the U.S. economy remains strong, equity and credit markets are becoming increasingly susceptible to certain macro-driven risks, such as the decline in oil prices. These risks are likely to continue to play a role in driving returns in 2015.
  • Weak supply and demand dynamics for oil over the next 12 months heighten the risk of further losses in the energy sector. The most prudent course of action would be to stress portfolios for the possibility that oil might fall further, to below $40 a barrel.
 

 

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Guggenheim Investments represents the following affiliated investment management businesses of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Partners Advisors, LLC, Guggenheim Corporate Funding, LLC, Guggenheim Partners Europe Limited, Guggenheim Partners Japan Limited, GS GAMMA Advisors, LLC, and Guggenheim Partners India Management.