Going Down with High Yield

During this recovery, mutual fund marketing representatives have harped on the fact that credit profiles have improved among junk-rated issuers. Although some high yield issuers have been helped by low interest rates and investors’ thirst for yield, high yield borrowers might not be as “healthy” as some would like us to believe. The following are S&P credit upgrades and downgrades for both high grade and high yield credits: Year-To-Date 2012 Upgrades Downgrades Total 560 612 Investment Grade 211 139 High Yield 211 310 As can be plainly seen, high grade corporate issuers have been the biggest beneficiaries of current credit condition. The high yield market has actually experienced more downgrades than upgrades, in spite of the golden age for corporate borrowing. It is the job of product marketing people to paint the rosiest picture possible. It is the job of Bond Squad to paint the most accurate picture. Tom Byrne tom@bond-squad.com. www.bond-squad.com www.mksense.blogspot.com 347-927-7823 Twitter: @Bond_Squad Disclaimer: The opinions expressed in this publication are those of the author. They are not, nor should they be considered solicitations to purchase or sell securities.