Market outlook positive for high-yield corporates

The outlook for UK and European high-yield corporate bonds is mildly positive for 2003, with stronger equities and economic growth expected to see lead to stability in credit ratings. Some issuers, such as telecoms, are likely to remain out of favour but new issuance and improved earnings prospects in other parts of the market are tipped to give managers plenty to choose from. David Fancourt, manager of the M&G High Yield Corporate Bond fund, believes equity markets are a key driver of high-yield bonds. He says: 'They are like a halfway house between investment grade and equities. If ...