Aegon Asset Management

High yield fundamentals: weathering a slowdown


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  1. In recent years, high yield companies diligently improved their balance sheets, resulting in the lowest leverage levels in more than a decade and the highest interest coverage ratios in recent history.
  2. The credit quality composition of the market has improved, with the high yield market now being over 50% BBs and roughly 10% in CCCs and below.
  3. With a potential recession risk looming on the horizon, high yield companies will likely be facing slowing consumer demand and cutbacks in business investments.