Polen Capital Credit Blog

Transitioning through the Teens

Anyone who has parented a teenager has likely experienced a period of time like 2015 was for the leveraged credit market. The fifteenth year of this current century was rife with angst, wild mood swings, and insecurity, just like many kids endure around the same age. In fact, for much of the fourteenth year, the market behaved similarly, and our expectations are for a continuation of such patterns into 2016, which draws a relatable parallel to the transition that a person makes from child to young adult.

1st Half 2015 Review

After experiencing a tumultuous second half of 2014, high yield bonds and leveraged loans rebounded with solid returns in early 2015 before continuing their bumpy trend toward the end of the first half (“1H15”). The BofA Merrill Lynch U.S. High Yield Bond Index (“HYBI”) and the JP Morgan Leveraged Loan Index (“JPM”) returned 2.49% and 3.01%, respectively, beating all other U.S. domestic credit asset classes and even some major equity indices, including the S&P 500. Interestingly, the absolute return, yield, and spread of the market finished June virtually unchanged from year-end.