2026 High Yield & Leveraged Loan Mid-Year Review & Outlook

While headline returns have been respectable, beneath the surface, dispersion has increased. Market averages have remained relatively stable, but issuer-level outcomes have diverged meaningfully based on business quality, industry positioning, and exposure to structural change. In our view, this widening dispersion has been one of the defining characteristics of leveraged credit markets in 2026 and has created a more favorable backdrop for active management.

What makes the current environment particularly interesting is the growing divergence between stronger and weaker credits.

Important Disclosures

This information has been prepared by Polen Capital without taking into account individual objectives, financial situations or needs. As such, it is for informational purposes only and is not to be relied on as legal, tax, business, investment, accounting, or any other advice. Recipients should seek their own independent financial advice. Investing involves inherent risks, and any particular investment is not suitable for all investors; there is always a risk of losing part or all of your invested capital.

No statement herein should be interpreted as an offer to sell or the solicitation of an offer to buy any security (including, but not limited to, any investment vehicle or separate account managed by Polen Capital). This information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Unless otherwise stated, any statements and/or information contained herein is as of the date represented above, and the receipt of this information at any time thereafter will not create any implication that the information and/or statements are made as of any subsequent date. Certain information contained herein is derived from third parties beyond Polen Capital’s control or verification and involves significant elements of subjective judgment and analysis. While efforts have been made to ensure the quality and reliability of the information herein, there may be limitations, inaccuracies, or new developments that could impact the accuracy of such information. Therefore, the information contained herein is not guaranteed to be accurate or timely and does not claim to be complete. Polen Capital reserves the right to supplement or amend this content at any time but has no obligation to provide the recipient with any supplemental, amended, replacement or additional information.

Any statements made by Polen Capital regarding future events or expectations are forward-looking statements and are based on current assumptions and expectations. Such statements involve inherent risks and uncertainties and are not a reliable indicator of future performance. Actual results may differ materially from those expressed or implied.
References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations.

The ICE BofA US High Yield Index, which is maintained by ICE Data Indices, LLC, is market capitalization weighted and comprises U.S. dollar denominated below investment grade corporate debt publicly issued in the U.S. domestic market. The ICE BofA Europe High Yield Index (USD Hedged) is a euro-denominated high yield corporate bond index with returns hedged into U.S. dollars. Morningstar LSTA U.S. Leveraged Loan Index: The Morningstar LSTA US Leveraged Loan Index is a broad, unmanaged high yield index composed of loans that meet the following inclusion rules; senior secured, minimum initial term of one year, initial minimum spread of Base Rate+125 basis points at inception, minimum size of $50 million, and U.S. dollar-denominated. It is impossible to invest directly in an index. The performance of an index does not reflect any transaction costs, management fees, or taxes.

Discounted Spread to Maturity is a measure of the yield spread of a floating-rate loan above a reference rate, based on its current market price and expected repayment at maturity. Option Adjusted Spread (OAS) is the yield spread of a bond over a risk-free benchmark, adjusted for the impact of embedded options. Yield to Maturity (YTM) is the annualized return an investor can expect if a bond is held until maturity, assuming all interest payments are received as scheduled and reinvested at the same rate. Yield to Worst is the lower of the yield to call or yield to maturity.

Past performance is not indicative of future results.

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