Global risks make for a choppy ride in high yield

ON BONDS

Aviva Investors' Andrew Lake discusses the outlook for the High Yield sector.

The strength of high yield and other risk assets over the last few years has been a direct result of the liquidity pumped into the world economy. As long as the spigot is on, there is little the market is not shrugging off. For example, Portuguese banks were downgraded on 28 March; Portugal and Greece sovereign were also downgraded on 29 March. And yet the market tightened. While these were not unexpected events, exogenous risk is increasing but is not being priced in. Fundamentally, companies are in good shape. Corporate results continue to show year-on-year improvement, and those th...