High Yield Morning Update

High yield bonds were better yesterday.  It is the heart of earnings season for high yield issuers and as an active manager, this is a time where we have a fresh look at how our holdings are doing from a fundamental basis.   This is also a time where we add new names because many traders read a headline and automatically sell before looking under the hood.  When securities are sold for the wrong reason, that can create an opportunity to add alpha for active managers.

Two high yield new issues priced yesterday with three more on the calendar for this week.  The month to date total is at $16.6B in proceeds which is closing in on the biggest August issuance since 2012. This alludes to a decently healthy market as new issues are coming to market despite outflows from the asset class.  The overall backdrop reflected in the stable economy, benign corporate earnings and declining U.S. high yield default rate we believe will hold the floor on high yield for now.

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