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by  BlueBay Fixed Income team, A.Skiba, CFA Sep 22, 2023

While the economic outlook remains clouded, there are several factors that make US high yield bonds attractive, especially compared to private credit. The highest yields in over a decade, a lack of supply and strong demand, combined with solid overall credit fundamentals, may provide investors in high yield a cushion from the potential risks in an uncertain macro environment. Meanwhile, defaults on private debt have been running about twice that of public market bonds. For us, the choice is clear. Andrzej Skiba, Head of US Fixed Income and BlueBay Senior PM at RBC Global Asset Management shares his insight on the current market environment and where we are finding the most attractive risk-adjusted opportunities.

Watch time: 50 minutes 31 seconds

Topics addressed:

  • US high-yield bonds remain attractive compared to private credit.
  • Private credit is plagued by a lack of transparency and a lack of liquidity.
  • In an economic scenario where there's a fair amount of uncertainty, liquidity is very valuable.
  • Companies using private credit are highly levered, which make them vulnerable to economic slowdown.
  • The leverage within public debt space is running at the lowest since the global financial crisis.
  • The wall of money pouring into private credit has watered down covenants and shrunk spreads.

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