Asset TV Masterclass: Why High Yield, Right Now

Watch Dave Breazzano talk credit markets & unlocking the most compelling yield opportunities seen in years

Dave Breazzano, head of Polen’s High Yield Team, joined an Asset TV Masterclass to discuss the risks and opportunities in fixed income markets and share his top 3 takeaways about high yield investing.

Masterclass Highlights

  • On Inflation: In our universe, inflation impacts each company differently based on their business model. So, we look at goods versus services as an example. Inflation in goods appears to be moderating, but labor costs are still a challenge. As credit investors, we must analyze the impact of inflation and different credit dynamics and how it affects each of our companies. So certainly, inflation is something that’s top and front of mind for us in how it impacts our credits.
  • On the Banking Crisis: Where we’ve seen the impact is the tightening in lending standards. So, we’re seeing a lot of growth and opportunity in private credit because traditional lenders and banks are reluctant to lend. They’re worried about liquidity and a theoretical run in their deposit base. So, it’s created some liquidity issues but also opportunities for those with more permanent capital to finance their lending activities.
  • Why High Yield?: Interest rates finally are at attractive levels after about 15 years. So, you’re getting paid to own and participate in the leveraged credit market. Plus, when you peel the layers of the onion away, the credit quality profile of the market is pretty good. There’s no near-term maturity wall, and this reflects a combination of factors, unlike prior severe inflection points, like in ’07 and ’08, people were generally caught by surprise.
  • 3 Takeaways: One, absolute yields are attractive. Two, near-term default losses aren’t expected to be that severe. And three, we have this wonderful tactical opportunity to refinance shorter-term maturities. It’s a win-win, the way we see it.

You have to be very nimble & focused on where you see value, and always be focused on downside protection. It’s critical.

—Dave Breazzano, Head of Team & Portfolio Manager, U.S. High Yield

Watch the full Asset TV Fixed Income Masterclass here →

Important Disclosures
Please note that this document is a condensed summary of the full roundtable interview conducted by Asset TV.

This information is provided for illustrative purposes only. Opinions and views expressed constitute the judgment of Polen Capital as of May 2023 and may involve a number of assumptions and estimates which are not guaranteed and are subject to change without notice or update. Although the information and any opinions or views given have been obtained from or based on sources believed to be reliable, no warranty or representation is made as to their correctness, completeness, or accuracy. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice, including any forward-looking estimates or statements which are based on certain expectations and assumptions. The views and strategies described may not be suitable for all clients. This document does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction. Past performance does not guarantee future results and profitable results cannot be guaranteed.