Five reasons to return to high yield bonds

The high yield bond sector saw its worst third quarter for three years, but the sharp falls are a good entry point for investors, according to Legg Mason affiliate Western Asset.

US high yield suffered a painful sell off in the last three months, as worried investors capitulated to US treasuries and other government bonds. As a result, US high yield spreads over treasuries have jumped from around 340bps in June to as much as 500bps in September. Michael Buchanan, head of global credit at Western Asset, said high yield is now "one of the most attractive areas within fixed income" and has listed five reasons to invest in the asset class. 1. Attractive yields above 6% Yields on high yield bonds dropped below 5% this year, but at the current levels of 6% the...