Why Defaults Aren’t Likely to Rock High Income’s Boat

26 February 2018

1 min read

Worried About Rising Defaults? Two Reasons Not to Be

Through December 31, 2017
Historical and current analyses do not guarantee future results.
Source: Bloomberg Barclays, J.P. Morgan and AllianceBernstein (AB)

Worried about rising defaults? Here are two good reasons not to be. First, even in 2009’s high-default environment, when the default rate topped 10%, US high yield delivered an astonishing 59% rate of return. Second, for 2018, we expect the high-yield default rate to rise to just 2.5%. That’s in line with the average over the past 10 years. So don’t add high defaults to your list of worries.

There is likely to be some volatility ahead, however, for income-oriented investors. We believe that the best approach for generating income in this kind of environment is a diversified, global multi-sector high-income strategy. Because while there are risks on the horizon, there are opportunities too.

The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.

This is a marketing communication. This information is provided by AllianceBernstein Limited, 60 London Wall, London, EC2M 5SJ. Registered in England, No. 2551144. AllianceBernstein Limited is authorised and regulated in the UK by the Financial Conduct Authority (FCA - Reference Number 147956). It is provided for informational purposes only and does not constitute investment advice or an invitation to purchase any security or other investment. The views and opinions expressed are based on our internal forecasts and should not be relied upon as an indication of future market performance. The value of investments in any of the Funds can go down as well as up and investors may not get back the full amount invested. Past performance does not guarantee future results. This information is directed at Professional Clients only and is not intended for public use.