1Q2024 - Opportunistic High Yield Commentary
Leveraged credit markets ended 2023 on a high note. The rally extended into 2024, however, at a more subdued pace. High yield bond and leveraged loan markets tightened in the face of increasing U.S. Treasury yields and continued domestic and geopolitical angst.
Read the full commentary & disclosures here
- During the first quarter of 2024, the Polen Credit U.S. Opportunistic High Yield Composite returned 2.90% gross and 2.84% net of fees, versus the 1.51% return of the ICE BofA U.S. High Yield Index (the “Index”).
- Stubborn inflation and resilient economic growth led to lower forecasts for U.S. Federal Reserve rate cuts in 2024, driving interest rates higher.
- Credit spreads tightened for high yield bonds and leveraged loans, contributing to lower-rated credits' outperformance.
- Refinancing activity for the Opportunistic High Yield representative portfolio (the “Portfolio”) increased among first lien loan positions. We deployed those proceeds primarily into high yield bonds.
- We view the current environment as favorable for an active approach like ours to capitalize on the best relative value opportunities across the leveraged credit market, regardless of credit rating.
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