Published Mon, 11 Feb 2019 12:01:50 -0500 on Seeking Alpha
It has been a whirlwind two months for the high yield corporate bond market. This article seeks to distill down the current opportunity set for Seeking Alpha readers.
December 2018 produced the worst monthly return (-2.1%) in three years during the commodity-related sell-off in late 2015. January 2019 produced the best monthly return for high yield debt in more than seven years (+4.5%) - since the October 2011 bounce back from credit stress related to the U.S. downgrade and rolling European sovereign debt crisis. While the "junk bond" market is a derisive nickname for below investment grade credit, the senior nature of debt in a company's capital structure has led the high yield corporate bond market to have less than 60% of the variability of the broad equity market. It has been a historic two month ride for high yield bonds, but that paled compared to the swing in equities. The lower volatility nature of high yield bonds was demonstrable as the S&P 500 sold off by 9% in December. These market moves leave the current yield-to-worst of the Bloomberg Barclays U.S. Corporate High Yield Index at 6.89%. With no credit losses from bond defaults, this would be the return that holders of a diversified portfolio of high yield corporate bonds would expect to earn over the 5.8 year average life of the index. The current credit spread over Treasuries of the high yield corporate bond market is 440bp, which can be viewed as compensation for credit risk. I view this as more than fair... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF||36.19||0.0||0.00||2.02||5.58|
Older articles featuring Spdr Barclays Capital High Yield Bond Etf (JNK):HYG And U.S. High-Yield Market Outlook: Week Ending April 5, 2019
3 ETFs For Diversified Dividends In April
A Fully Inverted Yield Curve, And Consequently A Recession, Are Coming To Your Doorstep Soon
High Yield Energy Debt: The Writing Is On The Wall/Oil
The Yield Curve Is Persistently Signaling That Danger Lies Ahead
Should High Yield Investors Be Concerned About 'Fallen Angels'?
ETFs In Focus: QUAL Looking Attractive; A Dividend Aristocrat ETF To Avoid; AWTM An Intriguing New Yield Enhanced ETF
Dividend Cuts For The High-Yield BDC Sector
Foreign High Yield Bonds Led Last Week's Mixed Market Results
Dividend Increases For The High-Yield BDC Sector, Part 4: Main Street Capital