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Article: Product parade: High yield bonds - Can the good times keep on rolling?
- Article from:
- Professional Wealth Management
- Article date:
- November 1, 2009
CopyrightCOPYRIGHT 2009 FT Business. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Byline: Ceri Jones
High yield bonds are having a remarkable year. Spreads over treasuries and gilts have tightened from record highs of about 2,500 basis points in mid-December to 800 basis points, a movement of 32 per cent in ten months.
The rally has flattened in the recent weeks, however, and opinion is divided on whether momentum can continue. At one extreme, optimists believe that high yield will be sustained by a strong rebound in the economy next year, particularly in the US, with growth alleviating many default problems, but at the other there is concern that current high default rates might continue or even escalate.
"There are two ...