Global HY markets (in dollar terms) saw weakening in Q1 overall as a hawkish Fed narrative, negative sentiment from the escalation of the conflict in the Ukraine, and increasing inflationary pressures across the world leading to recalibration of interest rate expectations — all led to GHY spreads widening during most of the quarter, before experiencing a partial rebound towards the last two weeks of March.
The floating rate counterpart of the High Yield asset class namely Leveraged loans saw only a small -0.01% loss in Q1, outperforming most risk assets such as US HY (-4.50%), US IG (-7.69%), and the S&P 500 (-4.60%).
EM HY significantly underperformed both US and Euro HY, mostly due to a broad-based sell off in the EM complex overall as significant sanctions on Russia impeded its access to global capital markets, as well as increasing concerns around debt sustainability of weaker countries and corporates on the back of a sharp increase in US interest rates.
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