US high yield bond markets points to healthy equities setting
Experience has taught us how important the US high yield bond market is to stock market health. In mid 2007, this important component of the bond market effectively froze over, closing to deals and rollovers that imperilled much of corporate US and beyond. This presaged the market top and ensuing correction that became the ‘GFC’. With this in mind, analysts at Eley Griffiths Group conference-called a Wall Street bond and leverage specialist for his take on the prevailing high yield market. With the events of 2007 in mind, we were relieved to hear his insights. Excepting shale energy, the high yield bond market is in very good shape. The market is healthy, liquidity is strong and the bid good. The quality of the paper on offer is also sound. Interestingly, he pointed to recent fund flow data highlighting a movement out of loan/money market funds/ETF’s (where rates are floating) into high yield products/ETF’s (fixed rates) as an endorsement of confidence and a sign that rates are unlikely to be hiked in the very short term. Read the report at (VIEW LINK)
Eley Griffiths Group is an independent fund manager specialising in listed Australian small companies. Our investment team has been uncovering hidden opportunities in small caps since 2003.