Report Highlights
We expect an improvement in leveraged credit fundamentals on the back of an earnings recovery and macroeconomic conditions, but it appears the majority of this has already been priced into spreads. Entering 2017 with the tightest high-yield bond spreads since August 2014, we expect this will mostly be a year of clipping coupons in high yield.
- The loan market looks appealing as LIBOR is set to move above existing LIBOR floors and the demand for floating-rate products accelerates.
- The evolving geopolitical environment could create temporary turbulence.
- Assessing the balance of risks, we conclude that this is not yet the time to sell credit, but another year of double-digit returns in credit is unlikely.
- Combining measures of leverage, interest coverage, and return on capital in a single Corporate Health index allows us to estimate default rates 12 months in the future. Our work supports the view that 2017 will prove to be a more benign credit environment than 2016.
Guggenheim Investments represents the investment management businesses of Guggenheim Partners, LLC ("Guggenheim"). Guggenheim Funds Distributors, LLC is an affiliate of Guggenheim.
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*Assets under management is as of 09.30.2018 and includes leverage of $11.8bn.
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.
This is not an offer to sell nor a solicitation of an offer to buy the securities herein. Only a Guggenheim Credit Income Fund 2019 (GCIF 2019) prospectus makes such an offer. This material is authorized only when it is accompanied or preceded by a GCIF 2019 prospectus. Neither the SEC nor the Attorney General of the State of New York nor any other state regulator has passed on or endorsed the merits of this offering. Any representation to the contrary is a criminal offense. Securities are offered through Guggenheim Funds Distributors, LLC, member of FINRA/SIPC, as Dealer Manager.
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