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Global High Yield Update – Q1 2024

Executive Summary

  • Data releases corroborating a soft-landing narrative in the US and stabilisation in Europe’s growth have aided market sentiment, and in turn the performance and outlook for growth assets.
  • An absence of shareholder-friendly excesses and large problem sectors in this cycle, remarkably strong corporate earnings, solid fundamentals and improving credit-lending conditions are all supportive for the HY asset class to experience a longer, but shallower defaults cycle.
  • Global HY spreads can remain well-anchored at the lower ends of the range, even as the market reassesses the prospect of rate cuts. Yields in the range of 7.5% are still at reasonably healthy levels and total-return-oriented investors need not position too conservatively.  

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