High yield bonds were better yesterday and today is opening slightly better too. Three new issues priced yesterday for $1.55B in proceeds with three more on the docket for today. The default risk in high yield bonds still remains low, as Moody’s reported a Q2 default rate of 3.8% versus 4.7% for Q1. It appears that corporate America’s CEO’s haven’t gone stupid by making expensive acquisitions or adding a bunch of capacity anticipating growth as they understand it is not there. The Bloomberg Barclays High Yield Index’s yield-to-worst hit a three year low yesterday, now at 5.36%, though we certainly are able to find better yielding opportunities as an active manager.
Although information and analysis contained herein has been obtained from sources Peritus I Asset Management, LLC believes to be reliable, its accuracy and completeness cannot be guaranteed. This report is for informational purposes only. Any recommendation made in this report may not be suitable for all investors. As with all investments, investing in high yield corporate bonds and loans and other fixed income, equity, and fund securities involves various risks and uncertainties, as well as the potential for loss. High yield bonds are lower rated bonds and involve a greater degree of risk versus investment grade bonds in return for the higher yield potential. As such, securities rated below investment grade generally entail greater credit, market, issuer, and liquidity risk than investment grade securities. Interest rate risk may also occur when interest rates rise. Past performance is not an indication or guarantee of future results. The index returns and other statistics are provided for purposes of comparison and information, however an investment cannot be made in an index.