The Tide Might Be Starting to Turn for Leveraged Loans

Leveraged loans have been a strong performer in credit markets, outperforming high yield bonds. However, recent trends indicate a potential shift, with increased short interest in major ETFs and significant outflows. Rising interest rates, exemplified by the surge in Libor, are increasing yields for investors but also raising concerns about the creditworthiness of companies. This creates a complex scenario for investors, balancing higher returns with potential risks.

What has been the performance of leveraged loans compared to high yield bonds this year?

What signs indicate that the tide may be turning for leveraged loans?

How have the outflows from the leveraged loan ETF changed recently?

What impact do rising rates have on companies and their creditworthiness?

What conundrum do investors face regarding the increased payments to companies?