Baring Asset Management: Interest Rate Hike Is Not Expected To Hinder High Yield Bond Performance
After deleveraging, high yield companies have enough cash and prudent balance sheet management helps significantly reduce the default rate, which is conducive to the performance of the global high-yield bond market.
Baring Asset Management believes that this trend will continue, Moodie forecast.
Default rate
From about 2.1% at present, it will fall to 1.6% in March next year, while standard & Poor's predicted default rate will fall further to 1.5% by the end of next year.
Because high yield enterprises need not be large quantities temporarily.
debt
For refinancing, high-yield bonds need to refinance $40 billion of debt between this year and next year, much lower than last year's $325 billion.
The burden of refinancing is small and within the controllable range.
Baring Asset Management believes that high-yield bonds can provide security for fixed income portfolio investment.
As economic growth and inflation rise, the performance of most bond markets may be disappointing, but relative to interest rate changes, the performance of high-yield bonds to issuers
credit
Quality is more sensitive.
Therefore, the bank believes that the market has expected to raise interest rates in the second half of this year, and the performance of high-yield bonds will be stronger.
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