Polen Capital Mid-Year Credit Outlook: Greater clarity on the Fed and fundamentals still intact

Polen Capital’s high-yield team has published their Leveraged Credit Mid-Year Review and Outlook, with insights on a tumultuous 2023 so far and what a contracting economy could mean for investors.

A few highlights:

• Investors are largely looking past looming challenges for HY bond and leverage loan issuers, with the “riskiest” credits performing best and signaling that concerns about a recession have eased in terms of severity and imminence.
• The lower-rated segment of the leveraged credit market is most at risk of maturity issues, driven by the shortage of issuance over the last 18 months.
• Though the banking sector has stabilized, it is not immune to future shocks and failures, with growing concerns over Commercial Real Estate one potential flashpoint that could cause spillover effects into corporate debt that while painful, could be temporary and an opportunity for discerning investors to take advantage of opportunities created by dislocations.
• Polen is positive on the current environment, as absolute yields are attractive with issuers refinancing bonds and loans at higher coupons and low prices in the secondary market providing upside.

If Polen’s HY Portfolio Managers -- Dave Breazzano, Ben Santonelli, John Sherman, Roman Rjanikov – can be helpful for your ongoing coverage please let us know and we’d be glad to arrange a call.

To see the Polen Capital credit outlook in full, please click here.

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