5 Jul 2023

Surprising Performance: U.S. High Yield CCC-rated Bonds up 10% YTD!

The Bloomberg US High Yield CCC-rated bond index has recorded an impressive 9.6% gain in 2023. Despite concerns of an impending U.S. recession, the lowest quality segment of the high yield market has emerged as one of the top performers in the U.S. fixed income space. The resilience of the U.S. economy and robust release of hard data have contributed to a significant tightening of the average credit spread for CCC-rated bonds, reaching a 1-year low of 835bps. This represents a 165bps tightening since the beginning of the year. Notably, CCC-rated credit spreads are currently below the historical average of 925bps, while the average yield remains in line with historical levels at 12.8% compared to 12.7%. Furthermore, it is worth mentioning that less than 2% of the index is set to mature in 2024. The question now arises: will CCC-rated bonds continue to outperform driven by strong technical factors, or have we reached the top? Source: Bloomberg.

Disclaimer

This marketing document has been issued by Bank Syz Ltd. It is not intended for distribution to, publication, provision or use by individuals or legal entities that are citizens of or reside in a state, country or jurisdiction in which applicable laws and regulations prohibit its distribution, publication, provision or use. It is not directed to any person or entity to whom it would be illegal to send such marketing material. This document is intended for informational purposes only and should not be construed as an offer, solicitation or recommendation for the subscription, purchase, sale or safekeeping of any security or financial instrument or for the engagement in any other transaction, as the provision of any investment advice or service, or as a contractual document. Nothing in this document constitutes an investment, legal, tax or accounting advice or a representation that any investment or strategy is suitable or appropriate for an investor's particular and individual circumstances, nor does it constitute a personalized investment advice for any investor. This document reflects the information, opinions and comments of Bank Syz Ltd. as of the date of its publication, which are subject to change without notice. The opinions and comments of the authors in this document reflect their current views and may not coincide with those of other Syz Group entities or third parties, which may have reached different conclusions. The market valuations, terms and calculations contained herein are estimates only. The information provided comes from sources deemed reliable, but Bank Syz Ltd. does not guarantee its completeness, accuracy, reliability and actuality. Past performance gives no indication of nor guarantees current or future results. Bank Syz Ltd. accepts no liability for any loss arising from the use of this document.

Read More

Straight from the Desk

Syz the moment

Live feeds, charts, breaking stories, all day long.

Thinking out loud

Sign up for our weekly email highlighting the most popular posts.

Follow us

Thinking out loud

Investing with intelligence

Our latest research, commentary and market outlooks