- Credit investors this month experienced their first notable bout of volatility in more than a year as the Federal Reserve quickly pivoted toward a more hawkish tone, oil prices declined and inflows into high yield bond and bank loan mutual funds, which had been relatively consistent earlier in the year, either moderated or turned negative.1
- Within this environment, senior secured loan prices saw a more muted decline compared to a more significant decline in high yield bond prices. In the first two weeks of March, for example, when investor sentiment first began to decline, high yield bond prices fell more than two dollars. Prices on senior secured loans in the same time frame actually climbed by several pennies.2
- More recently, high yield bonds have moved off their March low and prices on both senior secured loans and high yield bonds are generally flat year to date.2
1 J.P. Morgan High-Yield and Leveraged Loan Morning Intelligence, March 31, 2017 based on data from Thomson Reuters Lipper.
2 Prices on the Bank of America Merrill Lynch U.S. High Yield Master II Index and the Credit Suisse Leveraged Loan Index between February 28 and March 13.
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