“The biggest change to high yield companies over the last six months is for those issuers with floating-rate debt. For companies that have a capital structure split between leveraged loans and bonds, the loan portion of their debt load now carries higher interest ex...
As for geographies, we already invest in Euro-denominated debt, as well as US investment grade debt – despite the high costs of hedging currency risk – and we are more and more positive on emerging markets, which should offer interesting entry points next year. High time for high yield?
Stirland, Sarah
For Foundation allocations, our highest convictions are in (i) high quality Developed Market government bonds, particularly with longer maturities, (ii) global equities heading into early 2024, led by the US and Japan, and more broadly (iii) global equities and global bonds, which are likely to...
Especially in the U.S., the Case for Equities Over Bonds Has Diminished Quickly Spread of equity index earnings yield over local two-year government bond yield Source: FactSet. Data as of November 30, 2022. Nothing herein constitutes a prediction or projection of future events or future market...
high-yield and investment-grade bonds. This creates an opportunity to expand fixed income exposure into areas with more attractive risk/return trade-offs, such as emerging-market U.S. dollar bonds and private credit. Currencies: The U.S. dollar is expected to face upward pressure from tariffs...
Yield on a multi-asset income portfolio has rarely been this attractive, according to Morgan Stanley analsyts. Source: Haver Analytics, Morgan Stanley Research forecasts Bonds Make a Comeback In 2023, with interest rates set to decline, conditions bode well for stable and attractive bonds, as pr...
Weakening fundamentals and the potential for a recession in 2023 will negatively impact high yield loan issuers, translating into wider loan spreads, ratings downgrades, and higher defaults Considering that the average loan coupon currently surpasses the average coupon for high yield bonds for the firs...
A soft landing would likely prompt the Federal Reserve to lower its key interest rate in 2024, which would help restore a more normal shape to the yield curve, where longer-term bonds offer higher yields than shorter-term ones. However, a potential challenge for the bond market is the ...
The relatively high returns of high-yield bonds are also likely to be attractive to investors in 2024. Valuations are attractive in view of the rating quality and the expected moderate default rates. Risks for the asset class could arise in the event of a further escalation of the geopolitical...