PGIM's Collins Sees 100Bps Wider High-Yield Spreads

The video discusses the impact of credit contraction on default rates in the high yield market, noting that lending standards are tightening, which may lead to higher default rates. The historical average default rate is around 4%, and the current market is considered to be at fair value. The discussion also covers how recessions typically widen credit spreads, suggesting a tactical approach to investment. The video concludes by highlighting the importance of timing in the economic cycle to find cheaper entry points for investment.

Discuss the potential risks and rewards of investing in high yield assets during a weaker economic cycle.

What is the expected impact of monetary tightening on credit quality and spreads?