Amid headwinds, high yield bonds still offer valueDespite the very good run high yield bonds have enjoyed over the past few years, valuations and technicals remain supportive, according to Paul Appleby, head of Prudential Fixed Income’s Leveraged Finance Team.
The three drivers of the market today—reach for yield by investors, valuations and fundamentals—are somewhat mixed. "While the demand for yield will continue to be strong and valuations are good, the earnings outlook is a little bit weaker," Appleby says. He believes companies with more exposure to the U.S. consumer should see flat to modestly higher profits in the fourth quarter, while those that were benefiting from global and European demand will likely be more challenged.
Want to hear more of Paul’s outlook for the high-yield market? Watch this video or read Prudential Fixed Income's full outlook. Want to talk to Paul? Contact Theresa Miller.