Sparks: Ten reasons to buy high yield

TEN REASONS TO BUY HIGH YIELD

Schroders' head of US fixed income Wes Sparks explains why he thinks market volatility seen in recent weeks will present attractive buying opportunities in high yield credit.

In recent months I have been commenting a meaningful correction in high yield would unfold this summer and could drive yields as much as 100 basis points higher. The market is now getting there - as of 20 June, the yield on the global high yield index had risen 80bp from its tightest point about six weeks earlier. With the yield on the global high yield index at approximately 7.6% and the option-adjusted spread versus treasuries at more than 560bp, the market is getting closer to a point where valuations will become very compelling. Here is a countdown of ten reasons which make me...