When compared to Investment Grade (IG) bonds, High Yield (HY) bonds performed slightly better due to the lower duration risk present in HY bonds (as higher coupons/yields imply a lower duration). Looking at the total returns in this space, US and European HY bonds have fallen about 10% this year, while Emerging Market (EM) HY dollar bonds have dropped by 13%. Interestingly, the 12-month default rate in the US HY space stood at 1.2%, lower than the long-run average of 4.5%, as noted by Goldman strategist Spencer Rogers.
Issuance volumes in the high yield space saw a massive drop across all regions - the primary reason behind this was the massive rise in benchmark rates across the globe, making it costly for high yield issuers to tap primary markets. Issuance volumes across US, Europe, APAC ex-Japan and LatAm were the lowest in over a decade while GCC HY issuances were the lowest since 2015.
In the interactive chart below, you can switch between tabs to see the issuance volumes of dollar bonds across: US HY, EU HY (euro and dollar bonds), APAC ex-Japan HY, GCC HY, LatAm HY.
While there were significantly lower issuances of HY bonds in 2022, there were some notable large deals - Turkey raised $7.5bn through the year as part of its objectives to meet its borrowing target. Also on the list was Swiss lender Credit Suisse's $1.65bn Perp AT1, issued at a record-high coupon of 9.75% in June to raise capital to tide through the tough times brought about by the Archegos and Greensill funds blow-up. Below is a list of the largest deals in the HY space this year. We have also compiled the top 10 gainers and losers across the high yield space further below.
Disclaimer
The materials and information contained herein are solely for general information reference and educational purposes only, and not intended to constitute nor as a substitute for legal, commercial and/or financial advice from an independent licensed or qualified professional. The information, opinions and views expressed herein are not, and shall not constitute an offer or a recommendation to sell, a solicitation of an offer to buy or an offer to purchase any securities, nor should it be deemed to be an offer, or a solicitation of an offer, or a recommendation, to purchase or sell any investment product or service or engage in any investment strategy. Nothing herein has been tailored to the investment objectives or financial situation of any specific individual, are current only as of the date hereof and may be subject to change at any time without prior notice. No representation, warranty or claim whatsoever is made nor implied as to the accuracy or completeness of any material or information contained herein, nor we have no liability whatsoever for any error, inaccuracies or omissions. No reliance should be made on the materials or information herein for any investment decision, and we accept no liability whatsoever for any direct or indirect loss whatsoever which may arise from the use or reliance of any such material or information. The business of investing is a complicated matter that requires serious financial due diligence for each investment. No representation whatsoever on the suitability or otherwise of any securities, products, or services for any particular investor. Each investor is solely responsible for its own independent investment decision based on its personal investment objectives, financial circumstances and risk tolerance, and should seek its own independent legal, tax and other professional advice prior to any such decision.
The inclusion of any hyperlinks or external links should not be seen as an endorsement or recommendation of that website or the views expressed therein. We do not have any control over the content or actions of the websites we link to and will not be liable for anything that occurs in connection with the use of such websites.
