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

High-Yield and Bank Loan Outlook - July 2015

The energy sector represents an attractive opportunity to invest in high yielding securities, but investors must consider the sector specific first- and second-order effects of depressed energy prices.

July 14, 2015

Report Highlights

  • The Credit Suisse High Yield and Leveraged Loan indices posted modest gains of 0.3 percent and 0.8 percent in the second quarter of 2015, respectively, bringing year-to-date returns to 2.9 percent in both markets.
  • Tepid year-to-date returns of less than 3 percent across all risk assets including equities, preferreds, bank loans, and high-yield bonds suggest the summer lull has begun. Investors should raise cash positions by selling overpriced assets in preparation for continued weakness over the remainder of the summer.
  • Investors seeking to redeploy capital in undervalued opportunities may still find attractive, credit-worthy investments in the high-yield energy market where average yields of 8.8 percent look attractive against the broad fixed-income universe.
 

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