M&G Public Fixed Income - What next for global high yield bonds?

7 min read 20 Dec 21

Despite the doomsayers, we think the global economic recovery remains on track; in our view, underlying corporate fundamentals remain solid for many high yield (HY) bond issuers, backed up by record low levels of defaults.

  • Could this be encouraging news for investors looking for an element of inflation-proofing and the positive real yields
    the HY asset class can offer, or are current bond valuations a significant stumbling block?
  • Global HY bonds have been more effective than investment grade (IG) bonds at absorbing the threat of higher
    inflation and interest rates year-to-date, but credit spreads have continued tightening for much of 2021, posing a
    valuation conundrum for fixed income investors.

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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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