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8 Dec 2023

A Significant Decrease in High-Yield Bonds' Maturation Life: An Impending Threat?

Deutsche Bank's analysis of #highyield corporate bonds' maturity offers intriguing insights. In the last two years, the average maturity of high-yield bonds has significantly decreased, signaling companies' hesitancy to issue new debt amidst rising interest rates. This trend underscores the pressing challenges faced by high-yield borrowers on both sides of the Atlantic, with refinancing costs reaching levels seen only in severe crises over the past two decades. Not to mention that HY credit spreads are low, so what if they were to start widening sharply? #HighYieldBonds #FinancialInsights #MarketTrends #DeutscheBank #BankOfAmerica #Finance Source: Bloomberg, Deutsche Bank.

13 Nov 2023

Investor Repositioning on HY Revealed in Latest BoFA Credit Survey 🔄📈

The recent BofA Credit Investor Survey reveals significant shifts in market sentiment. For Investment Grade (IG) investors, net positioning dropped to -8% net underweight in November from a +8% net overweight in September. Conversely, High Yield (HY) witnessed an uptick, reaching +18% net overweight in November, the highest since Jan-2022. Notably, HY investors are more optimistic about spreads, with the net share expecting wider spreads dropping significantly for the 3 and 6-month horizons. Delving deeper into investor positioning, the HY landscape presents a nuanced picture. The primary repositioning in November focused on the #frontend (1-3y) and #higherquality of the HY. Many asset allocators are embracing a barbell strategy, blending exposure to the intermediate/long end of high-quality corporate bonds or Treasuries with a portion invested in the front end of the US HY, enhancing the average yield. The goal is to navigate economic uncertainties by benefiting from the safety of high-quality fixed income and compensating for potential defaults in the HY space. Could this strategic approach push the HY-IG Yield Ratio lower, considering it already reaches post-GFC lows? #CreditMarkets #Investing #FinanceInsights 📊💼 Source: BoFA

6 Nov 2023

Ford's Rise to Investment Grade Sparks Historic Shift in Junk Bond Market!

Ford's recent credit rating upgrade to Investment Grade status triggered a remarkable $46.8 billion exit from junk bond indexes, marking the most significant reduction in the global junk bond benchmark since 2005. This makes Ford the largest "rising star" in history. It underscores a transformation in corporate priorities, with a heightened focus on financial resilience amidst economic uncertainties. The trend of "fallen angels" descending into junk status has notably decelerated, and analysts anticipate more companies achieving investment grade status in the coming years. Source: Bloomberg #Finance #InvestmentGrade #JunkBonds 📉📊📈

13 Oct 2023

The gap between HYG (US High Yield) and the SPX (S&P 500) is getting wider and wider...

Source: TME

28 Sep 2023

US HY: watch out for take-off!

The disparity between cash and synthetic in High Yield (HY) has recently hit levels not witnessed since October 2022. While HY credit spreads in the cash bond market appear more resilient in response to the rapid increase in real rates, the CDX HY index, comprised of 5-year CDS of HY companies, has expanded by over 60 bps in just two weeks. The question now is, how long will this disconnect between the two markets persist? Source: Bloomberg #HighYield #CreditMarkets #Finance #Investing

25 Sep 2023


Global high yield bonds have been quite resilient so far in this cycle but the reality is that they will hit the maturity wall starting next year. And things will probably become more challenging whatever the economic scenario. If the economy does well and interest rates stay high for longer, the refinancing cost is likely to become more expensive. If the economy moves into recession, credit spreads are likely to go up hence still putting upward pressure on refinancing cost. So either way delinquencies are likely to increase. Source: Bloomberg

2 Aug 2023

U.S. High Yield credit spreads : time for decompression?

The updated Fed's July senior loan officer survey reveals a notable trend—there's an even higher net share of banks tightening lending standards for C&I compared to the prior survey in April. Historically, this has had implications for US high yield credit spreads. But is this time different? Source : Bloomberg

26 Jul 2023

Remarkable Rally Continues in US High Yield CCC-Rated Bonds!

The Bloomberg US High Yield corporate CCC-rated bond index has delivered a staggering return of over 11% in 2023 so far. To put things into perspective, this level of performance has only been surpassed once in the last decade, back in 2016! The impressive rally in this segment can be attributed to the significant tightening of CCC credit spreads, which have contracted by a remarkable 200bps! Additionally, the high carry of the CCC-rated bonds, with an average yield-to-maturity of 13% in 2023, has contributed to the sector's stellar performance. However, as we approach a critical juncture in the economy, with looming concerns over a potential recession, the question arises: can this impressive performance sustain itself? While a soft landing scenario seems currently fully priced in, the possibility of a materialized recession in the coming months adds an element of uncertainty to the equation. Source : Bloomberg

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