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10 Facts On The High Yield Bond Market

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 107.48   0.0 0.00 6.10 5.71

SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF - JNK
SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF - JNK  


Older articles featuring Spdr Barclays Capital High Yield Bond Etf (JNK):
Volatility Warrants Caution In U.S. High Yield
The Dividend Fallacy
Fallen Angel High Yield Bonds In The Late Cycle
Building A High-Yield Portfolio In A Low-Rate Era
Watching High Yield Credit After The FOMC Announcement Wednesday, July 31, 2019
Low Yield, No Yield, Negative Yield - Buy Now, But Don't Forget To Sell
PHB: Time To Reduce Exposure To This High Yield ETF
Building A Retirement Portfolio With BDCs Currently Yielding 10.6%
Beware The Yield Curve
'Flight To Safety' Investments Appear Stretched Given Low Yields And Wider Junk Bond Spreads

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