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Spotlight on Euro high yield – The changing shape of indices

30/06/2020

Both market volatility and credit rating changes have affected the composition and shape of the main high yield indices.

Significant swings in returns, first negative and then positive, have been a feature of the high yield markets, affecting sectors differently. During that time, the economic disruption Covid-19 has caused has led to many more credit rating downgrades.

The influx of Fallen Angels from investment grade status has been a feature affecting the shape of high yield indices. Meanwhile, the default rate in the US market has begun to increase, with official support in Europe suppressing any increase there.

  • Both macro and company-specific news are leading to substantial swings in credit spreads, which are creating interesting opportunities for credit investors.
  • The recent performance of some sectors of the credit market demonstrates the scale of the volatility being experienced across the markets.
  • Here we provide some of our latest observations, and how they are influencing some, of the decisions we are making for our flagship multi-asset credit strategy.

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The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested.

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This financial promotion is issued by M&G International Investments S.A.