Downgrades and defaults have moderated for now

Source: ICE Bank of America. Monthly data from January 1, 2001 to September 30, 2021. One hundred basis points equal 1%. An index is unmanaged and not available for direct investment. ICE BofAML U.S. High Yield Index is a market-capitalization-weighted index of domestic and Yankee high-yield bonds. The index tracks the performance of high-yield securities traded in the U.S. bond market. Credit ratings are not intended to indicate the value, suitability, or merit of an investment. They are opinions of credit quality and, in some cases, the expected recovery in the event of default. Bonds are subject to market, interest rate, price, credit/default, liquidity, inflation and other risks. Prices tend to be inversely affected by changes in interest rates. High yield fixed income securities are considered speculative, involve greater risk of default, and tend to be more volatile than investment grade fixed income securities.

Key Takeaways

  • Private Debt strategies focused on distressed or special situations are becoming less attractive as credit spreads have tightened and distressed opportunities have declined. Yet, we still anticipate opportunities for specialized direct lending strategies.