High yield floating rate note (HY FRN) outlook

8 min read 19 Jul 22

  • High yield floating rate notes (HY FRNs) have significantly outperformed fixed rate bonds during the monetary policy
    tightening cycle, thanks in no small part to their low duration risks.
  • We believe the investment environment remains favourable to the asset class, given expected future interest rate
    rises are yet to feed into HY FRN coupons.
  • The first half of 2022 ended with a major sell-off in credit spreads due to more persistent inflation than anticipated
    and increased fears of recessionary outcomes. We believe this presents some attractive potential opportunities,
    particularly given the additional security of senior-secured debt.

Find out more

Learn more about the fund

By M&G Wholesale Public Fixed Income team

The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

Related insights