High-Yield Bonds

Latest Stories

High Yield Retailers Send Distress Signal

By Greg Zappin | March 2, 2017

The high yield market continues to be a strong relative and absolute performer, up about 2.5% year-to-date (YTD) following a greater than 18% total return in 2016. Virtually all sectors have generated positive excess returns this year, except one: retail. The J.P. Morgan U.S. High Yield Index has tightened 28 basis points (bps), while the retail sub-index has widened 100 bps YTD. Often it pays to be a contrarian and add to sectors that are out of favor and have materially underperformed. However, the situation in retail is neither cyclical nor supply driven.

Strong Like Bull

By Greg Zappin | May 26, 2016

The high yield market has staged a remarkable comeback from its January and early February swoon and is now tracking for its best year since 2012. The question is: what is the durability of the rally and what could derail it?

Oil and High Yield Correlations Stay Strong

By Greg Zappin | March 31, 2016

Because of the high correlation with oil prices, it is increasingly difficult to have a call on the attractiveness of the high yield market without a call on oil.

High Yield Index Masks Significant Credit Dispersion

By Greg Zappin | November 26, 2015

The high yield market is tracking toward a low, single-digit negative total return for the year. This would only be the fifth time in the last 30 years that the high yield market has posted negative total returns.

Credit Minefield Leaves Few Safe Places to Hide

By Greg Zappin | October 1, 2015

During the first half of the year, investment grade credit spreads widened due to record new issue supply, while sector-specific pain was isolated in the energy and metals space. Up until July, it seemed like if you avoided anything related to China and commodities you were safe. There has been a big change in the market recently.

The Commodity Bloodbath Accelerates

By Greg Zappin | August 13, 2015

It has been a horrible few months for the commodity complex (oil, natural gas, met coal, thermal coal, copper, aluminum, steel, gold, etc.).

Leverage of Non-Financials and High Yield Maturity Wall

By Yiwei Tang | July 30, 2015

One of the myths often heard after the 2008 financial crisis is that corporation balance sheet are stronger than ever. This week’s chart shows the ratio of net debt to EBITDA for non-financial firms has grown to a 15-year high.

High-yield Bond Positioning as Liftoff Approaches

By Greg Zappin | July 9, 2015

While I expect the credit cycle to last into 2017, weaker credit quality is becoming evident. This week’s chart shows credit quality gradually deteriorating.

One Reason Why this High Yield Cycle is Different

By Greg Zappin | March 12, 2015

This week’s chart tracks the amount of leveraged buyout (LBO) activity over the last 15 years versus the aggregate dollar volume of merger and acquisitions (M&A).

Will the Broader High-Yield Market Continue to Decouple from Energy?

By Greg Zappin | January 22, 2015

This week’s chart depicts the bifurcation in spreads and performance between energy- and non-energy-related bonds in the JPM HY Index.



Disclosure Statement

The material provided here is for informational use only. The views expressed are those of the author, and do not necessarily reflect the views of Penn Mutual Asset Management.

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This material is for informational use only. The views expressed are those of the author, and do not necessarily reflect the views of Penn Mutual Asset Management.  This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.

Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice.  The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete.  Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements.  Actual results may differ significantly.  Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.

Investing involves risk, including possible loss of principal.  Past performance is no guarantee of future results.  All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.

High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.

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Copyright © 2014 Penn Mutual. All Rights Reserved. All trademarks are the property of their respective owners.

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