What is the outlook for US high yield?

  • 19 October 2022 (3 min read)

Audio recording transcript:

It's interesting to talk about sort of macro themes, and we do expect that over the next 12 to 24 months, the total return potential within the high yield market is quite appealing.

We don't expect a severe recession. Our U.S. economists are calling for maybe a mild recession, but that's an environment where U.S. high yield issuers can operate quite comfortably.

And on average, slow growth is typically a very positive environment for issuers. And I think just with that, with the valuations that have been built into the current levels of the market, you would have to see a lot of deterioration in credit quality before you had realized losses that would offset the compounding of that coupon as well as the pull to par.

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