European high yields set to outperform next year

Professional Adviser
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Expectations are rising for European high yield bonds to outperform in the second half of 2002. Dr...

Expectations are rising for European high yield bonds to outperform in the second half of 2002. Drawing parallels with the 1990-91 US recession, Jim Leaviss, head of retail and institutional fixed interest at M&G, expects default rates to peak toward the end of the first half of next year, sparking a period of outperformance from the sector as risk aversion slowly dissipates. At the height of the last US recession in 1991, he notes, sub-investment grade bonds peaked at yields of up to 40%. Following the peaking of default rates, the asset class went on to outperform over the medium te...

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