PM Perspectives: Our Positive Prognosis For High Yield

In this video, Portfolio Manager Seth Meyer discusses the latest in high-yield fixed income, including how the market has changed and the current health of fundamentals and technicals within the sector. He also shares some strategies he believes can help generate yield while dampening volatility.
Key Takeaways From a credit ratings and credit metrics perspective, we may be in a better place than 2007-2008 despite the fact that valuations are starting to approach similar levels. In the high-yield market today, credit fundamentals and technicals are solid, and we think U.S. high yield remains relatively healthy. In a market where credit spreads are relatively tight, generating yield without pushing the risk envelope becomes challenging; one of the possible ways to do this is by moving up the capital structure.
Transcript Seth Meyer: I think it's very easy to look at spreads as your measure of volatility and your measure of valuation when you're looking at the high-yield market, because that's generally where you're going to start. How much additional yield am I going to get above the Treasury for buying this company? I think one of the things that gets lost in that sort of an evaluation and that sort of just paint brushing the market is the market itself has evolved significantly over the past 10 years. Entering the financial crisis, the percentage of CCCs that were in most indices was somewhere between 800 and 1,000 basis points higher going... Read more