Entries by Stephen Hillebrecht

    High Yield: Oil Impact Spills Over to Other Sectors

    December 23, 2014 4:25 PM by Stephen Hillebrecht

    Negative sentiment toward energy bonds has extended into other areas of the high-yield market. That may present an attractive opportunity.

    The steep decline in oil prices and its effect on securities of energy companies in the high-yield bond market has garnered much attention in the past several weeks. Due to large issuance of high-yield bonds by energy companies in the past several years, the sector now accounts for more than 13% of the Bank of America Merrill Lynch U.S. High Yield Master Index. Although recent price declines have reduced energy’s weight, it is still the largest sector in the index. Certainly, there are many highly leveraged companies that will face challenges if oil prices stay at these levels, but not all energy companies’ fortunes are equally tied to the price of crude.

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    High Yield: Falling Oil Prices Highlight Need for Active Management

    December 9, 2014 4:50 PM by Stephen Hillebrecht

    Not all segments of the energy sector are affected equally. 

    While the decline in the price of oil has been well publicized over the past several weeks, recent reports have noted the possibility of a negative impact on the high-yield bond market. The energy sector is the largest component of this market, with a 15.3% weighting in the Bank of America Merrill Lynch High Yield Index. However, before drawing any conclusions about your allocation to high yield, further analysis is required.

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    Making the Case for Floating-Rate Loans

    May 23, 2014 12:00 PM by Stephen Hillebrecht

    Recently, we’ve been reading about modest outflows from floating-rate loan funds, industry-wide – a trend abetted by press reports that are questioning the benefits of the asset class. Lord Abbett has been a long-time investor in floating-rate loans, and we believe strongly that the asset class merits an allocation in a diversified fixed-income portfolio. Here’s why.  

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