There are 11 item(s) tagged with the keyword "high yield".
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For income-oriented investors, now is the time for bonds. As rates have shifted higher, coupon rates on newly issued bonds have continued to climb higher, offering income opportunities rarely seen in recent years. Notably, we think high yield bonds are worth a closer look as they provide high income and compelling total return potential.
The maturity wall has been a hot topic lately—and rightfully so. After all, the ability of issuers to repay their debt obligations is a key consideration for bond investors. And assessing the upcoming maturity schedule becomes even more critical for high yield companies, some of which may face strained liquidity or challenges accessing capital markets.
Colin Finlayson, Euan McNeil and Thomas Hanson from Aegon Asset Management’s fixed income team take a closer look at the prospects for Sovereign Bonds, Investment Grade Credit and High Yield Credit in 2024.
Although caution is warranted, high yield continues to offer attractive opportunities.
High yield investors are facing a conundrum as they evaluate valuations and entry points.
For years, investors have faced the reality of lending to corporates at ever falling yields. Now, the high yield market is living up to its name. As rates have shifted higher, yields on high yield bonds continue to increase, even in the higher-quality part of the market.
The opening months of 2023 have been something of a curate’s egg for the global high yield market. January witnessed a truly monumental rally that surprised many with its ferocity, driven in no small part by the supportive technical environment. However, February’s performance has been more circumspect as, among other things, rates markets have sold off and put pressure on total returns.
Challenging economic conditions are setting the stage for an interesting year ahead. As the economy slows and the cycle ages, companies will likely face financial headwinds. Although firms are entering the year with solid balance sheets, can high yield issuers weather a downturn?
Higher inflation and interest rates are unknowns for the high yield bond market, but with inflation far above US and European 2% targets central banks are having to raise rates.
Government bond markets have experienced material volatility year to date, with yields rising to reflect changes in expectation for policy rates globally. Central banks are raising interest rates in response to the continued high levels of inflation being experienced in many countries. At the time of writing the bond markets are already discounting increases in rates to levels not seen since before the financial crisis of 2008. In the UK in particular, bank rate is already at 1%. In the UK, the market is implying through the yield curve that bank rate will peak at around 2.25%, in the US around 3% and in Europe 1.5%. The implied curves are shown below.
Displaying: 1 - 10 of 11