Off late most investors of below investment grade debt – be it leveraged loans or high yield bonds – are intently focused on three specific questions, two of which are fairly straight forward, while the third is more complex:
Q1. What is the state of the credit fundamentals and tangentially, what are current underwriting standards like?
A1. Solid and reasonable, respectively
Q2. What are valuations like in the market?
A2. The current and forecasted benign default environment is supportive of current valuations and spread levels; however, macro influences could lead to bouts of volatility Continue reading “Leveraged loans or High yield bonds”