Outlook for high yield floating rate notes - June 2022

5 min read 14 Jun 22

High yield floating rate notes (‘HY FRNs’, or floating rate corporate bonds), have significantly outperformed fixed rate bonds over the past 18 months.

With central banks still behind the curve in fighting inflation, we believe the asset class offers further potential.

In the following note, we explore the potential advantages offered by the M&G (Lux) Global Floating Rate High Yield Fund in the coming period:

  1. Low duration, which protects capital when interest rates rise

  2. Floating rate income, with regular coupon payments moving in line with cash rates

  3. Higher credit spreads, which look potentially attractive relative to historical credit cycles and offer the potential to protect against inflation eroding the real value of income received
     

To read the note in full, please click here

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.

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