/perspectives/sector-views/high-yield-and-bank-loan-outlook-february-2021

A Ripe Environment for Strong Credit Performance

Our positive 2021 economic outlook, combined with better-than-expected company fundamentals, supports strong credit performance and spreads.

February 25, 2021


High-Yield and Bank Loan Outlook

First Quarter 2021

Here are the key takeaways from our latest High-Yield and Bank Loan Outlook report:

  • The increase in leverage and decrease in interest coverage in 2020 were almost entirely driven by the decline in earnings. The economic recovery and associated improvement in consumer spending should help cure that.
  • Although we are not avoiding any sector entirely, including transportation and airlines, there are many opportunities in the middle of the stack of fundamentals and valuations without extending risk significantly. Some sectors are consumer cyclical products, business services, metals and mining, financials, media, pharmaceuticals, and manufacturing, to name a few.
  • History shows there is more room for credit spreads to compress against Treasurys, and that spreads can persist at low levels for several years, even well after the Fed has begun tightening monetary policy.
  • Although there may be short-lived pullbacks in markets this year, we expect the current cycle has some time to run and would welcome those opportunities to buy at better prices.
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This material contains opinions of the author, but not necessarily those of Guggenheim Partners, LLC or its subsidiaries. The opinions contained herein 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 are not assured as to accuracy. 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.

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FEATURED PERSPECTIVES

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March 25, 2021

A Successful Green New Deal Will Need Private Partners

A Green New Deal should not be viewed as a big government program, but as an opportunity to reinvent vast swaths of the U.S. economy while pursuing the laudable goal of carbon neutrality.

March 11, 2021

Staying on Offense

Even as credit spreads have narrowed, further value remains.


VIDEO

First Quarter 2021 Fixed-Income Outlook
 

First Quarter 2021 Fixed-Income Outlook

Portfolio Manager Adam Bloch and Matt Bush, a Director in the Macroeconomic and Investment Research Group, share their outlook for the first quarter 2021.

Core Fixed-Income Conundrum 

Solving the Core Conundrum

Anne Walsh, Chief Investment Officer for Fixed Income, shares insights on the fixed-income market and explains the Guggenheim approach to solving the Core Conundrum.







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Investing involves risk, including the possible loss of principal.

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 Corporate Funding, LLC, Guggenheim Partners Europe Limited, GS GAMMA Advisors, LLC, and Guggenheim Partners India Management. Securities offered through Guggenheim Funds Distributors, LLC.

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