Now that Donald Trump has surprised virtually everyone with his Presidential victory, what does that mean for the high yield market? For us, it looks like the most relevant impacts are interest rates, taxes, and regulations. We are already starting to see Treasury rates increase, and if that continues, what does that mean for the high yield market? And since the moment Trump’s victory became certain, there has been incessant discussion of the various legislative and regulatory changes he may enact, so where does that leave us? As we evaluate these various aspects, we do see some potential positives for the high yield market that may well come on the regulatory side. However, we remain skeptical on a rapid rise in rates. Yet either way, we believe the knee jerk reaction of investors to sell all “bonds” because rates are going to go up provides us with a very nice entry point across the high yield bond and loan asset class. Click here to read our recent writing, “The Election Impact on the High Yield Market: Rates and Regulation.”
Although information and analysis contained herein has been obtained from sources Peritus I Asset Management, LLC believes to be reliable, its accuracy and completeness cannot be guaranteed. This report is for informational purposes only. Any recommendation made in this report may not be suitable for all investors. As with all investments, investing in high yield corporate bonds and loans and other fixed income, equity, and fund securities involves various risks and uncertainties, as well as the potential for loss. High yield bonds are lower rated bonds and involve a greater degree of risk versus investment grade bonds in return for the higher yield potential. As such, securities rated below investment grade generally entail greater credit, market, issuer, and liquidity risk than investment grade securities. Interest rate risk may also occur when interest rates rise. Past performance is not an indication or guarantee of future results. The index returns and other statistics are provided for purposes of comparison and information, however an investment cannot be made in an index.