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Press release content from Globe Newswire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

Guggenheim Fourth Quarter 2021 High-Yield and Bank Loan Outlook: Are High-Yield Markets Misjudging Evergrande Risk?

November 24, 2021 GMT

NEW YORK, Nov. 24, 2021 (GLOBE NEWSWIRE) -- Guggenheim Investments, the global asset management and investment advisory business of Guggenheim Partners, today provided its Fourth Quarter 2021 High-Yield and Bank Loan Outlook. Titled “Are High-Yield Markets Misjudging Evergrande Risk?,” the report explains why investors may be too sanguine about the Chinese government’s ability to successfully manage the unwinding of Evergrande debt.

Among the highlights in the 16-page report:

  • While the Asia high-yield sector reflects concerns over Evergrande and other overextended Chinese property companies showing distress, other credit markets—which usually exhibit positive correlation—have not demonstrated indications of worry.
  • This unusual situation represents the market’s faith that China will successfully manage the unwinding of Evergrande’s debt, but we think they are dismissing the long-term effects of Beijing’s crackdown on overleveraged industries.
  • The U.S. high-yield market is no longer the domestic island many participants perceive it to be. Our research shows the typical high-yield issuer has 27 percent exposure to non-U.S. sources of revenue, with one sector showing as much as 44 percent exposure. This interconnectedness means that issuers in the U.S. high-yield index are susceptible to a potential China growth slowdown through second or third-order effects.
  • Abundant central bank-driven liquidity may also be causing U.S. high-yield investors to become complacent about risk, but central banks are moving to withdraw some accommodation in the next 12 months, including the U.S. Federal Reserve (Fed) through a tapering of asset purchases.
  • Very strong corporate fundamentals and the improving economy lead us to remain constructive on the U.S. high-yield market, but we are mindful of the risks as we move along stages of the cycle.

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For more information, please visit http://www.guggenheiminvestments.com.

About Guggenheim Investments

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Guggenheim Investments is the global asset management and investment advisory division of Guggenheim Partners, with more than $259 billion1 in total assets across fixed income, equity, and alternative strategies. We focus on the return and risk needs of insurance companies, corporate and public pension funds, sovereign wealth funds, endowments and foundations, consultants, wealth managers, and high-net-worth investors. Our 260+ investment professionals perform rigorous research to understand market trends and identify undervalued opportunities in areas that are often complex and underfollowed. This approach to investment management has enabled us to deliver innovative strategies providing diversification opportunities and attractive long-term results.

1. Guggenheim Investments assets under management are as of 9.30.2021 and include leverage of $17.9bn. Guggenheim Investments represents the following affiliated investment management businesses: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Corporate Funding, LLC, Guggenheim Partners Europe Limited, Guggenheim Partners Fund Management (Europe) Limited, Guggenheim Partners Japan Limited, GS GAMMA Advisors, LLC, and Guggenheim Partners India Management.

Investing involves risk, including the possible loss of principal. The potential impacts of the COVID-19 outbreak are increasingly uncertain, difficult to assess and impossible to predict, and may result in significant losses. Investments in fixed-income instruments are subject to the possibility that interest rates could rise, causing their value to decline. High-yield and unrated debt securities are at a greater risk of default than investment grade bonds and may be less liquid, which may increase volatility.

This material is distributed or presented for informational or educational purposes only and should not be considered a recommendation of any particular security, strategy or investment product, or as investing advice of any kind. This material is not provided in a fiduciary capacity, may not be relied upon for or in connection with the making of investment decisions, and does not constitute a solicitation of an offer to buy or sell securities. The content contained herein is not intended to be and should not be construed as legal or tax advice and/or a legal opinion. Always consult a financial, tax and/or legal professional regarding your specific situation.

This material contains opinions of the author, but not necessarily those of Guggenheim Partners, LLC or its subsidiaries. The opinions contained herein are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information. No part of this material may be reproduced or referred to in any form, without express written permission of Guggenheim Partners, LLC.

Media Contact
Gerard Carney
Guggenheim Partners
310.871.9208
Gerard.Carney@guggenheimpartners.com