Bonds Briefly is a new regular look at fixed income markets – addressing a range of issues from large macroeconomic factors, to smaller more technical influences on the market and how RLAM is investing on your behalf. Bonds Briefly is a quick way to learn something about things that are influencing bond investing right now.
In this first edition, Stephen Tapley, co-manager of the RL Global High Yield Bond Fund, talks about covenants in the high yield new issue market. Stephen talks about ‘covenant erosion’, provides some examples of weak covenants, how the market is reacting to these, and what these might for investors. Stephen outlines why covenants need to be analysed on a case-by-case basis and how managers should continue to engage with issuers.
Past performance is no guide to the future. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.