Leveraged Credit Mid-Year Market Review & 2023 Outlook

Perspective on a tumultuous year to date and what an economic contraction could mean for investors

Our High Yield Team sheds light on the dynamics affecting leveraged credit investing in this mid-year market review and outlook.

Download the Leveraged Credit Mid-Year Market Review & 2023 Outlook →

Highlights & Key Takeaways

  • At mid-year, markets have greater clarity on U.S. Federal Reserve policy and leveraged credit borrowers’ fundamentals are still intact.
  • Concerns remain about inflation and the risk of a recession. Moreover, the growing interest burden for leveraged loan issuers and a shift in the maturity schedule have led to mounting worries of a rise in defaults.
  • We maintain a constructive view of the market, regardless of an anticipated increase in defaults. At Polen Capital, we aim to build client portfolios positioned to withstand a downturn. We believe that careful credit selection remains paramount, and intensive due diligence and patience offer the best defense

Explore All Charts in the Flipbook

YTD Performance: High Yield Bonds & Leveraged Loans
YTD Performance Components: Price and Income Returns
YTD Performance: High Yield Bonds and Leveraged Loans by Ratings
Credit Suisse Leveraged Loan Index- Average Coupon
High Yield Bonds and Leveraged Loans: Face Value Outstanding by Year of Maturity
High Yield Bonds & Leveraged loans: % of Maturities by Rating bar chart

In our view, the current environment of low-priced bonds and high coupon loans provides fertile ground for active management to add incremental yield without incurring undue risk.

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

Download the Leveraged Credit Market Review & 2023 Outlook →

Important Disclosures
This information is provided for illustrative purposes only. Opinions and views expressed constitute the judgment of Polen Capital as of July 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.

The ICE BofA U.S. High Yield Index tracks the performance of U.S. dollar denominated below investment grade corporate debt publicly issued in the U.S. domestic market. Please note that one cannot invest in the index. The Credit Suisse Leveraged Loan Index is designed to mirror the investable universe of USD institutional leveraged loans, including U.S. and international borrowers. Please note that one cannot invest in the index.