Markets appear to expect the Federal Reserve to hold interest rates steady during 2020. In this environment, we think the outflows seen in leveraged loan mutual funds are likely to abate, and possibly change directions.
At the time of this writing, many bank loans are priced at a discount to par and currently offer attractive yields. We think these conditions could increase interest in an asset class often thought of only as an up-rate bet.
The majority of bank loan maturities remain pushed out to 2024 and beyond, so we think it's unlikely that default rates will materially increase in 2020.
This blog post is provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of Loomis, Sayles & Company, L.P. This information is subject to change at any time without notice.