High yield comes down to earth

This year’s impressive showing in the high-yield market came to an abrupt end in May as the buoyant new-issue market ran out of steam with no borrowers launching junk bonds for at least two weeks. The change in the interest rate outlook in the US led to a huge sell-off in risky assets, with high yield taking a buffeting.

“Certain borrowers’ bonds have been sold off dramatically due to the prospect of having to refinance short-term debt at a higher rate,” says Philip Milburn, investment manager