The Election Impact on the High Yield Market: Rates and Regulation

Now that Donald Trump has surprised virtually everyone with his Presidential victory, what does that mean for the high yield market? For us, it looks like the most relevant impacts are interest rates, taxes, and regulations.  We are already starting to see Treasury rates increase, and if that continues, what does that mean for the high yield market?  And since the moment Trump’s victory became certain, there has been incessant discussion of the various legislative and regulatory changes he may enact, so where does that leave us?  As we evaluate these various aspects, we do see some potential positives for the high yield market that may well come on the regulatory side.  However, we remain skeptical on a rapid rise in rates.  Yet either way, we believe the knee jerk reaction of investors to sell all “bonds” because rates are going to go up provides us with a very nice entry point across the high yield bond and loan asset class. Click here to read our recent writing, “The Election Impact on the High Yield Market: Rates and Regulation.”

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