Assessing the High-Yield Bond Market

This Bloomberg.com article interviews several of the top high-yield fund managers about their current assessments of the market. The top manager of the last decade is optimistic. He believes the recent sell off and concerns about a recession are unwarranted. Others aren’t as optimistic. But none of the managers recommends across the board buying in high-yield bonds. They all advise cautious buying in companies and sectors.

Top bond managers have divergent views on the high-yield bond market, which slumped to more than a two year low in February before rebounding as job growth accelerated. DoubleLine Capital’s Bonnie Baha warned last week that China’s weakening economy might inflict more pain on junk-bond investors. Notkin is more bullish, expecting mid-to-high single-digit returns this year, while Pimco’s Mark Kiesel sees buying opportunities.

“The market is as attractive as it has been in four or five years,” Kiesel, chief investment officer for global credit at Pacific Investment Management Co., said in an interview last week. Pimco favors bonds in industries tied to the strength of the U.S. economy, including housing, he said in an e-mail Tuesday.