Commentary

Preparing for a changing credit cycle

Why higher rates may eventually lead to increased distressed investment opportunities.

By: Brian Drainville
Updated: 10/30/2023
Key Takeaways
  • Dispersion among U.S. high-yield bond issuers has risen along with interest rates.
  • Historically, when dispersion has risen, distress in the high-yield market also has tended to rise, offering investors opportunities to take advantage of credit dislocations.
  • Transition in the high-yield market has been orderly so far, largely a function of still sound corporate finances.
  • Yet as refinancing needs increase in 2024 and beyond, so too may the challenges of adjusting to higher interest rates.
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