Guggenheim Fourth Quarter 2020 High Yield and Bank Loan

NEW YORK, Nov 06, 2020 (GLOBE NEWSWIRE) – Guggenheim Investments, the global asset management and investment advisory business of Guggenheim Partners, today presented its outlook for bank and high yield loans in the fourth quarter 2020. Entitled “Credit Opportunities Under Challenging Conditions,” the report explains that while credit spreads have ample room to tighten, there is an overhang of a challenging credit environment as measured by credit spreads. market default rate, ratings migration and fundamentals.

Among the highlights of the 16-page report:

  • Central bank action played a key role in supporting the availability of credit, tempering forward expectations of default rates. However, we expect certain sectors, namely energy and retail, to continue to suffer from defaults in the future.
  • Avoiding these defaults is crucial, as investors only recover on average 40% and 70% of par in high-yield defaults and on bank loans, respectively, and recoveries since the start of the year have were significantly lower than these averages.
  • Credit spreads remain near the 60th percentile of historical observations going back to 1998, giving them ample room to tighten.
  • The cumulative 12-month high yield bond net leverage ratio of 4.5x has already passed the 2008-2009 default cycle peak of 3.9x, and is expected to worsen as 2019 data is excluded of calculation.
  • This year, we have selectively added high yield exposure to longer maturity bonds, including angel investors.
  • Our research shows that fallen angel prices tend to rebound after entering the high yield index, confirming the existence of a structural anomaly that causes them to be oversold around the index transition period. towards wider spreads than the fundamentals justify.
  • All indications point to continued improvement in sub-investment grade bonds. Any setback should be viewed as temporary and, as such, an opportunity to add positions.

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About Guggenheim Investments

Guggenheim Investments is the global asset management and investment advisory division of Guggenheim Partners, with more than $ 233 billion1 in total assets through bond, equity and alternative strategies. We focus on the risk and return needs of insurance companies, private and public pension funds, sovereign wealth funds, endowments and foundations, consultants, wealth managers and high net worth investors. Our more than 300 investment professionals conduct rigorous research to understand market trends and identify undervalued opportunities in areas that are often complex and under-tracked. This approach to investment management has enabled us to offer innovative strategies offering diversification opportunities and attractive long-term results.

1. The assets under management of Guggenheim Investments as of 30.09.2020 and include a leverage effect of 14 billion dollars. Guggenheim Investments represents the following affiliated investment management companies of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Corporate Funding, LLC, Guggenheim Partners Europe Limited, GS GAMMA Advisors, LLC and Guggenheim Partners India Management.

Investing involves risks, including the possible loss of capital. The potential impacts of the COVID-19 outbreak are increasingly uncertain, difficult to assess and impossible to predict, and can lead to significant losses. Investments in fixed income instruments are subject to the possibility that interest rates will rise, causing their value to fall. High yield and unrated debt securities have a higher risk of default than investment grade bonds and may be less liquid, which can increase volatility.

One basis point is equal to 0.01%.

This material is distributed or presented for informational or educational purposes only and should not be taken as a recommendation of any particular security product, strategy or investment, nor as investment advice of any nature whatsoever. This document is not provided in a fiduciary capacity, may not be relied on for or in connection with making investment decisions, and does not constitute a solicitation of an offer to buy or sell securities. The content hereof is not intended to be and should not be construed as legal or tax advice and / or legal advice. Always consult a financial, tax and / or legal professional regarding your specific situation.

This material contains the views of the author, but not necessarily those of Guggenheim Partners, LLC or its affiliates. The opinions contained in this document are subject to change without notice. The forward-looking statements, estimates and certain information contained in this document are based on proprietary and non-exclusive research and other sources. The information in this document has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. Past performance does not represent future results. There is no representation or warranty as to the current accuracy, nor responsibility for decisions based on such information. No part of this material may be reproduced or referenced in any form without the express written permission of Guggenheim Partners, LLC.

Media contact
Gerard Carney
Guggenheim Partners
[email protected]

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