Skip to Main Content

3 Strikes: High Yield Corporate Bonds


3 Strikes: High Yield Corporate Bonds


In 2020 there was a historic amount of corporate debt downgraded because of the pandemic and increased amount of issuance. Today we see 3 reasons to be cautious of high yield corporate bonds: Strike 1 – Investor protection has collapsed since 2014 and today over 85% of bonds are “covenant lite”. Strike 2 – There are huge amounts of BBB rated investment grade bonds on watch to be downgraded. Strike 3 – High yield bond yields are the lowest in their history (3.24% on BB rated bonds). We reduced our credit exposure in January and are short-term in our corporate bond exposure.

Written by

James E. Gore, CFA®, CAIA, CMT®

Jim serves as the Chief Investment Officer of THOR, is a Chartered Financial Analyst charter-holder, a Chartered Alternative Investment Analyst, a Chartered Market Technician, a member of the Association for Investment Management and Research and a member of the Cincinnati Society of Financial Analysts.

See bio

Recent News