Guggenheim Investments examines whether high yield bonds and bank loans remained attractive after a multi year rally despite growing bubble concerns. It argues supportive monetary policy and credit cycle history still favored leveraged credit, while strong demand for bank loans reflected rising interest rate concerns and changing investor preferences.
High Yield and Bank Loan Outlook April 2013 (Guggenheim Partners)
BMO Global Asset Management
Research
1 Pages
Key Takeaways
Credit Cycle Timing: Credit spreads historically do not begin widening until about 80 months after a recession, while April 2013 marked only the 46th month of the current rally.
Loan Demand Strength: Bank loan funds recorded 31 consecutive weeks of positive inflows, with roughly $13 billion raised year to date, already exceeding all of 2012.
Refinancing Wave: Bank loan issuance reached $150 billion in the first quarter of 2013, with 64% used for refinancing to reduce borrowing costs and spreads.
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