Bank loan

Guggenheim Second quarter 2021 High Yield and bank loan

NEW YORK, May 13, 2021 (GLOBE NEWSWIRE) – Guggenheim Investments, the global asset management and investment advisory business of Guggenheim Partners, today presented its outlook for second-tier bank and high-yield loans. quarter 2021. Entitled “In the recovery phase of the credit cycle”, the report explains why fundamentals support a long positioning in credit-sensitive fixed income assets despite tight spreads.

Among the highlights of the 16-page report:

  • Looking ahead, we believe that the length of the recovery phase and the expansion phase of this credit cycle will depend on the discipline of borrowers and investors, as well as other factors, including interest rates. , economic growth, government policy and external shocks.
  • The credit cycle framework suggests that we will move to other phases before we experience another wave of default activity, which alleviates our concerns about historically tight credit spreads.
  • High yield credit spreads have only been tightened 8% of the time for over 20 years. Our view is that fundamental conditions support the maintenance of long credit despite historically tight credit spreads, just as they did in the early 1990s when spreads remained close to similar levels for years.
  • Earnings before interest, taxes, depreciation, and amortization (EBITDA) of publicly traded high yield issuers are expected to increase 24% year-on-year based on median analyst estimates. We calculate that earnings growth alone would reduce median debt ratios to 4.1x, levels last seen in late 2018.
  • Based on the pace of rating revaluations in the first quarter of 2021, nearly 28% of the current high yield bond index could benefit from a revaluation of at least one notch by the end of the year.
  • Since the probability of default decreases with credit rating upgrades, it makes sense to look for value further down the spectrum of credit ratings.

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About Guggenheim Investments

Guggenheim Investments is the global asset management and investment advisory division of Guggenheim Partners, with more than $ 245 billion1 in total assets through bond, equity and alternative strategies. We focus on the risk and return needs of insurance companies, corporate and public pension funds, sovereign wealth funds, endowments and foundations, consultants, wealth managers and high net worth investors . Our 295+ 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. Assets under management of Guggenheim Investments as of 3.31.2021 and include leverage of $ 15.4 billion. 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, Guggenheim Partners Fund Management (Europe) Limited, Guggenheim Partners Japan 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 epidemic are increasingly uncertain, difficult to assess and impossible to predict, and can result in 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%.

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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 current accuracy, nor is there any liability 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]