High yield bonds bounce back after downturn

Aberdeen's Paul Reed likes Spanish gaming firm Codere and leading glass and metals packaging supplier Ardagh for their robust earnings and attractive long-term prospects

High yield bonds have bounced back strongly over the past couple of years.After being heavily over-sold during the financial crisis, the asset class remains attractive. Back in 2008 and early 2009 an irrational fear of high yield (and all risk assets) led to spreads widening to 1,300 basis points over government bonds. Today spreads are trading around 540 basis points and fundamentals are back in focus. While investors will not enjoy the outsized gains of the past two years, the asset class continues to be a good source of income. Yields remain attractive, particularly compared t...