Sifting Through “Junk” in Search of “Gems”
In this mid-year Leveraged Credit Review & Outlook, our high yield team explains why they believe this is one of the most attractive environments to invest that they have seen for some time.
- Prices of high yield bonds declined significantly during the first six months of the year. In part, this price decline was in response to heightened inflation, a rise in U.S. Treasury yields, and a dramatic shift in Fed policy.
- We believe that the current environment presents discerning investors with an opportunity to capitalize on selling pressure brought on by this year’s volatility.
- Increased volatility has created not only a more attractive entry point into the high yield bond market, but also exposed buying opportunities across leveraged credit, according to our analysis.
In our view, even if spreads widen or yields increase further, today’s environment offers a compelling entry point for generating strong long-term returns within the leveraged credit market.
—Dave Breazzano, Head of Team, U.S. High Yield
This information is provided for illustrative purposes only. Opinions and views expressed constitute the judgment of Polen Capital as of June 2022 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.
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