Seeking Alpha

Fridson pulls "extreme overvaluation" tag from high yield after July selloff

  • The high-yield market lost about 2% in July, with the average spread to Treasurys rising to 424 basis points from 353. Fridson's estimate of fair value is 467, meaning the overvaluation level has shrunk to just 43 bps from nearly 200 in late June.
  • Also of note, says Fridson, is a "substantial improvement" in credit availability which is a key part of his fair value calculation. The Fed Survey of Senior Loan Officers shows a net easing of credit standards read of 21.3%, nearly double that of the previous print - "the most favorable credit environment since September 2011," says Fridson.
  • ETFs: HYG, JNK, HYLD, HYS, SJNK, BSJF, SJB, BSJE, BSJG, HYHG, BSJI, ANGL, HYLS, UJB, BSJH, XOVR, THHY, QLTC, SHYG, BSJK, HYGH, BSJJ, HYND, HYZD
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