29 Jun Market Insight – The High Yield Market is Shrinking. That Could be Good News for Investors
By Voya Investment Management
The size of the U.S. high yield market increased steadily from the mid-1980s through early 2015, with pauses only in the telecom implosion of 2000 and the global financial crisis of 2008. Over the past two years, however, the high yield market has been steadily shrinking – this despite robust new issue activity and a tsunami of fallen angels downgraded from investment grade to high yield in the commodity crash of 2015-16. Since 3/31/2015, the par amount outstanding in the Bloomberg Barclays U.S. Corporate High Yield index has declined from $1.36 trillion to $1.29 trillion, and the number of issuers has declined from 1098 to 965.
So why is the high yield market shrinking and, more importantly, what does it mean for investors?