Bonds issued by companies with credit ratings below investment grade – variously called “sub-investment grade” or “high yield” – have fallen to multiyear lows, as lenders fear that a stalling global economy and higher interest rates will undermine companies’ ability to repay. Credit Ratings The Solactive USD High Yield Corporates Total Market Index, which measures high yield bonds issued in US dollars, is down almost 15% year-to-date. The only other times high yield bond indexes have fallen so far so fast in recent memory were the 2008 financial crisis and the 2020 covid-19 selloff. While the drawdown may be unsettling, it offers a chance to review the merits of this often-misunderstood asset class. ...
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