High yield floating rate note (HY FRN) outlook

6 min read 14 Jun 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 we are still in the early stages of the central bank rate hiking cycle and future rate rises are yet to feed into HY FRN coupons.
  • Credit spreads are wider than their long-term average, with downside scenarios already priced in. 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