Guggenheim BulletShares 2014 High Yield Corporate Bond ETFNYSEARCA
Dec. 9, 2014, 3:51 PM
- “Plunging oil prices have driven nearly one out of four high-yield energy issues into distressed territory,” writes Marty Fridson, not saying whether he's a buyer here, or not. “The implied default rate for the next 12 months fits the trajectory we would likely see leading up to an industry-specific oil patch recession in 2016.”
- Michael Aneiro notes the energy sector constitutes about 17% of the broad high-yield market, and both the SPDR Barclays High-Yield ETF (JNK -0.3%) and the iShares version (HYG -0.2%) are lower again on the session (even as oil has rebounded into the green).
- In June - when the BAML high-yield index yield hit an all-time low of 4.86% - the energy sector yielded about the same at 4.88%. Today, with the BAML index at 6.48%, the energy portion yield has soared to 8.9%, a full 710 basis points over comparable Treasurys.
- Previously: Oaktree pounces as energy tumbles (Dec. 9, 2014)
- ETFs: HYG, JNK, HYLD, HYS, SJNK, SJB, BSJF, HYHG, BSJE, BSJG, ANGL, BSJI, HYLS, UJB, HYZD, XOVR, THHY, BSJH, QLTC, SHYG, BSJJ, HYGH, HYND, BSJK, BSJL, BSJM
Dec. 2, 2014, 5:09 AM
- With a $17B issuance from Medtronic (NYSE:MDT), U.S. corporate bond sales broke an annual record yesterday, pushing offerings for 2014 past the $1.5T mark.
- The surge in sales has been boosted by record-low borrowing costs, prompting companies to lock in on the low rates.
- ETFs: HYG, JNK, LQD, HYLD, HYS, VCSH, SJNK, VCIT, VCLT, CORP, CSJ, SJB, BSJF, CIU, HYHG, BSJE, BSJG, CRED, ANGL, LWC, BSJI, HYLS, SCPB, CLY, WYDE, BSCF, BSCE, ITR, BSCH, UJB, HYZD, XOVR, IGHG, QLTA, THHY, BSCG, BSJH, BSCI, QLTC, SHYG, BSJJ, HYGH, HYND, TYTE, BSJK, IBCE, COBO, IGS, SLQD, BSCK, CBND, FCOR, LQDH, IBCB, LDRI, QLTB, BSCJ, IBCC, BSCM, IBDH, IBDF, BSCL, IBDD, IGU, IBDC, BSCN, IBDA, IBDB, IBCD, BSCO, SKOR, BSJL, BSJM
Oct. 16, 2014, 3:32 PM
- Warning about "extreme overvaluation" for some time in high-yield, Martin Fridson says the market is at long last back to being at least "moderately undervalued."
- The average spread per the BAML index between junk and Treasurys has climbed to 508 basis points from a low of about 340 bps this summer, and Fridson's model of the option-adjusted spread pegs fair value at 442 bps. The 66 basis points between that and 508 represents about one-half of a standard deviation - hence the "moderately."
- UBS is a buyer as well: "We believe there has been shift in the relative attractiveness between the equity risk premium and the more defensive credit risk premium, and we add to overweight position in U.S. high yield credit."
- Previously: BlackRock buying the dip in junk bonds
- ETFs: HYG, JNK, HYLD, HYS, SJNK, SJB, BSJF, BSJE, BSJG, HYHG, ANGL, BSJI, HYLS, WYDE, UJB, XOVR, THHY, BSJH, HYZD, QLTC, SHYG, HYGH, TYTE, BSJJ, BSJK, HYND, BSJL, BSJM
Sep. 18, 2014, 12:49 PM
- The Guggenheim BulletShares 2023 Corporate Bond ETF (NYSEARCA:BSCN) and the Guggenheim BulletShares 2024 Corporate Bond ETF (NYSEARCA:BSCO) will track portfolios of investment grade corporate funds.
- The Guggenheim BulletShares 2021 High Yield Corporate Bond ETF (NYSEARCA:BSJL) and the Guggenheim BulletShares 2022 High Yield Corporate Bond ETF (NYSEARCA:BSJM) will cover portfolios of high yield corporate bond funds.
- Other BulletShares ETFs: BSJF, BSJE, BSJG, BSJI, BSCE, BSCF, BSCH, BSJH, BSCG, BSCI, BSJK, BSJJ, IBCE, BSCK, IBCB, BSCJ, BSCM, BSCL
Aug. 15, 2014, 8:59 AM
- U.S. high-yield bond funds booked $680M of inflows in the week ended August 13, according to Lipper, their first weekly inflow in a month. A record $7.1B was pulled the prior week, and for the month ended August 6, a total of $12.6B was withdrawn.
- “When we saw these big outflows we were looking to buy stuff,” says one fund manager, though he notes the big withdrawal numbers did little damage to prices.
- Alongside the outflows has been a slowdown in borrowing, with leveraged-loan issuance of $9.7B and junk-bond sales of $2.9B this month, the lowest for the period since 201.
- ETFs: HYG, JNK, HYLD, HYS, SJNK, BSJF, SJB, BSJE, BSJG, HYHG, BSJI, ANGL, HYLS, UJB, BSJH, XOVR, THHY, WYDE, SHYG, QLTC, BSJK, HYGH, BSJJ, HYND, HYZD, TYTE
Aug. 5, 2014, 12:55 PM
- 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
Jul. 15, 2014, 10:46 AM
- A combined $620M was pulled from the two largest high-yield ETFs (HYG, JNK) last week, making them the least popular in the fixed-income ETF universe during that period, according to data put together by Bloomberg.
- The move comes with yields on the BAML U.S. Index right around their record lows, and strategists suggest investors are cashing in some chips after a near straight-line rally over the past few months, if not years. While these ETFs are aimed at individual investors, they're increasingly being used by institutions to adjust exposure in a relatively low liquidity sector.
- ETFs: HYG, JNK, HYLD, HYS, SJNK, BSJF, SJB, BSJE, HYHG, BSJG, ANGL, BSJI, HYLS, UJB, BSJH, XOVR, THHY, QLTC, SHYG, BSJK, HYGH, HYND, HYZD, BSJJ
Jul. 8, 2014, 11:25 AM
- It definitely feels like investors are getting overexuberant, and you can stay in overexuberant conditions for a while,” says Key Private Bank's Fred Senft. "But when it turns it will turn quickly and it will turn very ugly.”
- First half high-yield corporate bond issuance of $331B blew away the already perky levels of the last three years (2013's was about $250B) as yields on the BAML Global High Yield Index plumb new record lows. Even Japan's notoriously risk-averse Government Pension Investment Fund is considering scrapping its practice of only buying investment-grade paper and venturing into junk.
- Senft's day of reckoning could be coming near, with junk-rated borrowers having $737B in debt needing to be refinanced or paid off in the next five years. "It's about as extreme as it gets," says Marty Fridson, who estimates spreads are about 200 basis points too tight.
- ETFs: HYG, JNK, HYLD, HYS, SJNK, BSJF, SJB, BSJE, HYHG, BSJG, ANGL, BSJI, HYLS, UJB, BSJH, XOVR, THHY, QLTC, SHYG, BSJK, HYND, HYGH, HYZD, BSJJ
Jun. 16, 2014, 1:29 PM
- High-yield debt funds raised their allocations to stocks to 3.2% at the end of March, up from 3.1% at the end of 2013 and just 2.1% one year earlier.
- JPMorgan suggests investors do more of the same: “We see credit as relatively over-owned and valued versus other risk assets,” says JPMorgan. “Investors are beginning to worry about how the eventual exit will fare in a world of reduced market making by banks.”
- The move comes as junk bond yields scrape record absolute lows, and on a relative basis, junk buyers are earning 346 basis points more than benchmark rates, the lowest since 2007 and 241 basis points less than the two-decade average. “We prefer to take more risk in equities and we now cut the size of our U.S. high-yield spread trade by one-third," says JPMorgan.
- ETFs: HYG, JNK, HYLD, HYS, SJNK, BSJF, SJB, BSJE, HYHG, BSJG, BSJI, ANGL, HYLS, UJB, XOVR, BSJH, THHY, SHYG, QLTC, BSJK, HYZD, HYND, HYGH, BSJJ
May 21, 2014, 12:01 PM
- No longer "way overvalued," junk bonds are "way, way overvalued," says Martin Fridson, estimating fair value of the BAML high-yield index at 570 points over Treasurys vs. the current level of just 376 basis points.
- He says high-yield has been in extremely overvalued territory for seven straight months, the longest streak in history. "Investors are accepting excessively small compensation for credit risk, so desperate are they to boost their yields. High-yield portfolio managers are not unaware of the inadequacy of spreads, but are willing to skate on thin ice on the assumption that the Fed is committed to rescuing them if anything goes wrong."
- GMP Securities' Adrian Miller, meanwhile, is in agreement on overvaluation, but says - more or less - you've got to dance while the music's playing. A "repricing event," says Miller is not on the near-term radar.
- ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, HYHG, BSJG, BSJI, ANGL, HYLS, UJB, BSJH, XOVR, THHY, SHYG, QLTC, BSJK, HYZD, HYND, BSJJ
Apr. 22, 2014, 11:55 AM
- Maybe surprising to many, long-dated investment-grade corporate bonds are outperforming junk bonds this year, with total returns already of 7.48% vs. junk at 3.3%. It's a turnaround from 2013, when high-yield returned 7.42% vs. a loss of 1.57% for IG paper.
- It's good news for institutional investors like pension funds and insurers, who have been big buyers of the bonds in recent months.
- Investment-grade corporate debt ETFs: LQD, VCSH, VCIT, VCLT, CORP, CSJ, CIU, CFT, SCPB, LWC, CLY, ITR, QLTA, IGHG, PFIG, SLQD, IGS, CBND, IGU, QLTB
- In other junk bond news, DoubleLine's Bonnie Baha says the firm's core fund has cut its high-yield exposure to 3% from 6%. High prices are the reason, says Baha, noting the average price of 104.5 cents on the dollar. Many issuers can force redemptions at 103 cents, and if they don't get called, in a low-rate environment there's extension risk.
- Baha takes note of the proliferation of short-duration high-yield funds. "It's a fallacy to think that just because it’s short-term that bad things can’t happen."
- High-yield ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, BSJG, HYHG, BSJI, ANGL, HYLS, UJB, BSJH, XOVR, THHY, YPRO, SHYG, QLTC, BSJK, HYZD, HYND, BSJJ
Apr. 16, 2014, 11:11 AM
- At 1.7% at the end of Q1, the U.S. junk bond default rate is off from 2.2% at the end of 2013, and at the lowest level since February 2008, according to Moody's. With the market yielding an average of just 5.2% (prior to 2012 it had never been below 6.5%), the default rate better stay low.
- Moody's sees the default rate rising to 2.4% by year's end and 2.7% one year from now - both still well below the 20-year average of 4.5%.
- It's not necessarily a booming economy, but instead welcoming debt markets which allow low-rated issuers to refinance at extended maturities and lower rates.
- ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, BSJG, HYHG, BSJI, ANGL, HYLS, BSJH, UJB, XOVR, THHY, SHYG, QLTC, BSJK, HYZD, HYND, BSJJ
Apr. 8, 2014, 2:51 PM
- "There are segments of the high-yield market that do not compensate you for the risk you are taking by owning them," says BlackRock portfolio manager Michael Fredericks. Average spreads to Treasurys have fallen to just 352 basis points, the lowest since prior to the financial crisis.
- There's still value, insist some managers, you just have to know where to look. "The game has changed in the high-yield market and it has become more sophisticated than it was two or three years ago," says another fund manager. Barclays chief of credit strategy Brad Rogoff, for instance, is spotting value in the high-yield paper sold by mining and retail companies, as well as the dollar-denominated bonds sold by European companies. The so-called "yankees" are on average cheaper than the boarder market, he says.
- Another option is that of emerging market high-yield debt, with average yields of 7.6% more than 200 basis points higher than that of U.S. paper.
- Related ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, BSJG, HYHG, IHY, EMHY, HYEM, BSJI, HYXU, ANGL, PGHY, HYLS, XOVR, UJB, BSJH, THHY, IJNK, SHYG, QLTC, BSJK, HYZD, HYND, BSJJ
Mar. 12, 2014, 2:56 PM
- The average covenant-quality score for high-yield bonds deteriorated to 4.36 in February from 3.84 one month previous (ranking is from 1 to 5, with 5 the weakest). It's the lowest print since Moody's began tracking the gauge in January 2011.
- The decline was driven by a near-record percentage of high-yield-lite bonds - 39% of issuance in February vs. just 10% in January. “These bonds lack a debt incurrence and/or a restricted payments covenant and automatically receive our weakest score of 5.0," says Moody's Evan Friedman.
- ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, BSJG, HYHG, BSJI, ANGL, BSJH, HYLS, XOVR, THHY, UJB, QLTC, SHYG, BSJK, HYZD, BSJJ, HYND
Mar. 12, 2014, 8:42 AM
- "There's no way for prices to go up at this point," says Jeff Gundlach of the junk bond market. The average junk bond yields just 5.3% and trades above 104 cents on the dollar, he says, higher than the 103 level at which many bonds can be called by their issuers.
- “If a bond is priced to call, and rates rise, it might not get called. People may think they own a short-term portfolio but if interest rates rise it might turn into a 10-year bond instead. It would also roll up the yield curve ... This could be a debacle."
- I’m not worried as much about interest rate risk and credit risk ... I’m worried more about liquidity risk and naively owned positions."
- ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, BSJG, HYHG, BSJI, ANGL, BSJH, HYLS, XOVR, THHY, UJB, QLTC, SHYG, BSJK, HYZD, BSJJ, HYND
Mar. 11, 2014, 1:37 PM
- High-yield investors should take little comfort from a low default rate (with most forecasting for that to continue), says Martin Fridson, reminding the default rate in 2007 was 0.975%, but junk suffered a 5.6% price drop that year.
- The commonly held belief that high-yield total return equals yield minus default loss is "essentially irrelevant over a one-year horizon" in that it assumes the bonds which default in any given year began the year at par. In truth, the vast majority of any year's defaults began the year as distressed paper with spreads to Treasurys of 1K basis points or more.
- "Investors are ill-served by overly simplistic analysis implying that mid-double-digit returns are a sure thing as long as the default rate remains below average. The high-yield market has proven that it is quite capable of generating substantial price declines even in the face of extremely low default rates and declining Treasury yields."
- Yesterday: Junk-bond default rate slides to just 1.6%.
- ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, BSJG, HYHG, HYEM, IHY, EMHY, BSJI, HYXU, ANGL, PGHY, BSJH, HYLS, XOVR, THHY, UJB, QLTC, SHYG, BSJK, HYZD, BSJJ, HYND