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FICC Focus
High Yield 1Q Investor Survey, Europe vs. US Views: Credit Crunch
Feb 7, 2025
Marco Salkovaci, a Senior High Yield Fund Manager at Union Investments, dives deep into the high yield market trends, revealing that default rates in Europe are at a low 2.5% and just 1.1% in the US. He discusses mixed investor sentiment for 2024, influenced by economic uncertainties and interest rates. They explore the evolving landscape of corporate bond supply, highlighting a preference for high-yield assets. The conversation also touches on liquidity strategies and the potential impacts of Germany's upcoming elections on investment trends.
33:40
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Quick takeaways
- The podcast highlights a cautiously optimistic sentiment among investors regarding high yield returns for 1Q25, despite a decline in positive outlook from previous quarters.
- Experts emphasize that while high yield bonds are perceived as richly valued, opportunities for returns continue to exist, driven primarily by interest rates and potential recession impacts.
Deep dives
Quarterly High Yield Returns Outlook
The sentiment regarding high yield returns for the quarter is cautiously optimistic, with 35% of respondents reporting a positive outlook, despite a decline from 54% in previous quarters. The initial month showed a gain of 0.6% in high yield, leading experts to agree that high yield should perform well throughout the quarter. The conversation emphasized that while volatility may increase, the market is focusing on carry strategies that could sustain positive returns for the rest of the year. This ongoing positive outlook appears grounded in market sentiment and historical performance trends.
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Discover
highlights
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