Entries filed under 'High Yield'

    Drilling for Oil Bonds

    May 13, 2016 11:33 AM by Lord Abbett Editorial Staff

    While overleveraged exploration and production (E&P) companies most exposed to the shale boom remain pressured, some investment opportunities have arisen.

    While many actively managed fixed-income strategies were underweight the oil sector through most of the commodities correction, some shifted to an overweight of E&P in early winter of 2016, as companies with substantial high-yield debt but solid long-term fundamentals (and no trigger for default) appeared attractive.

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    High Yield: Oil Impact Spills Over to Other Sectors

    December 23, 2014 4:25 PM by Stephen Hillebrecht

    Negative sentiment toward energy bonds has extended into other areas of the high-yield market. That may present an attractive opportunity.

    The steep decline in oil prices and its effect on securities of energy companies in the high-yield bond market has garnered much attention in the past several weeks. Due to large issuance of high-yield bonds by energy companies in the past several years, the sector now accounts for more than 13% of the Bank of America Merrill Lynch U.S. High Yield Master Index. Although recent price declines have reduced energy’s weight, it is still the largest sector in the index. Certainly, there are many highly leveraged companies that will face challenges if oil prices stay at these levels, but not all energy companies’ fortunes are equally tied to the price of crude.

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    High Yield: Falling Oil Prices Highlight Need for Active Management

    December 9, 2014 4:50 PM by Stephen Hillebrecht

    Not all segments of the energy sector are affected equally. 

    While the decline in the price of oil has been well publicized over the past several weeks, recent reports have noted the possibility of a negative impact on the high-yield bond market. The energy sector is the largest component of this market, with a 15.3% weighting in the Bank of America Merrill Lynch High Yield Index. However, before drawing any conclusions about your allocation to high yield, further analysis is required.

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    Fixed Income: Opportunity amid Volatility

    October 16, 2014 2:59 PM by Zane Brown

    Amid the current market turmoil, where should bond investors focus?

    Risk is off and volatility is back. Financial markets have been whipsawed this past week by fears of a slowing in global economic growth. While equities have suffered sizable losses, the Treasury market has benefited as investors seek the perceived safety of U.S. government debt. 

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    Bonds: The 2014 Halftime Report

    July 1, 2014 4:10 PM by Zane Brown

    Will the best-performing market segments be able to sustain their momentum in the final six months of the year? 

    While the biggest fixed-income story in the first half of 2014 was the drop in 10-year U.S. Treasury yields, from 3.05% to 2.55% ( according to Bloomberg data), tightening credit spreads probably did more to enhance investor returns during that time.  

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