We’ve been very positive on global high yield since central banks stepped in so promptly to support markets on an unprecedented scale following the initial impact of Covid-19 in March 2020.
It was hard to be anything else, particularly once the Federal Reserve (Fed) committed to buying corporate bonds as well as government debt, and that position has served our clients well over most of the period since then.
While it may not be a surprise that we remain bullish on global high yield going into 2022, a lot has changed under the surface for us to retain this positive view. I would certainly have given a very different answer if I’d been asked at the beginning of August 2021. At that time, the yield on the global high yield market was down at around 3.8%, having started the year at 4.2% – at that level, it was difficult to see significant upside for the market as a whole, although particular credits still had potential.
The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.