By Michael Kirkpatrick, Managing Director, Senior Portfolio Manager, Seix Investment Advisors LLC
High yield fundamentals have shown remarkable resilience. Leverage ratios remain stable. Interest coverage remains more than sufficient, and while high yield bond default rates are expected to pick up from historical lows, they are largely concentrated in energy. Further, the sharp rise in fallen angels through 6/30/20 spells considerable potential opportunities for nimble managers that can spot relative values and manage risk.