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Weekly Market Summary

Jan. 30 to Feb. 3, 2023

View Current Performance

Extra Credit*

  • Investment-grade corporate bonds started 2023 with their best start in 34 years and well above the average January return for the asset class at 3.81% vs. the average January return of 0.87% since 1973.
  • In high-yield bonds, risk was rewarded as CCC high-yield returned 6.06% vs. 3.29% for BBs high yield. The last time CCC high-yield bonds outperformed BB high-yield bonds by such a margin to start the year was in 2003 when CCC high-yield bonds had an excess return over BB high-yield bonds of 6.43%.
  • The composition of defaults/distressed transactions over the past year includes 14 companies with only bonds outstanding, 19 companies with only loans outstanding, and seven bond-and-loan issuers.
  • Recovery rates for high-yield bonds ended 2022 at 55.3%, up 5.7% YTD, 33.4% above YE20, and 15.4% above the 25-year annual average of 39.9%.
  • Recovery rates for first-lien loans ended 2022 at 59.9%, up 4.25% YTD and 11.58% above YE20.
  • The trailing 12-month default rate for high-yield bonds and bank loans finished 2022 at 1.83% and 1.82%, well below their long-term average of 3.2% and 3.1%.
Yield as of:
Feb. 30, 2023
High-Yield Bonds
Investment-Grade Corporates
Last Week
Prior Week
Start of the Year
Option Adjusted Spread as of:
Feb. 30, 2023
High-Yield Bonds
Investment-Grade Corporates
Last Week
385 bps
530 bps
108 bps
Prior Week
413 bps
537 bps
112 bps
Start of the Year
469 bps
592 bps
121 bps
Prices as of:
Feb. 30, 2023
High-Yield Bonds
Investment-Grade Corporates
Last Week
Prior Week
Start of the Year

*Source: Morningstar®, Bloomberg, Credit Suisse. OAS is Options Adjusted Spread. 4-year discount margin is used for spread for bank loans. Yield quoted is yield-to-worst or equivalent calculation. YTD Low / High for yields are based on end of week and not intraday movements. Indexes and sub-indexes: Investment-grade corporates represented by Bloomberg US Corporate Bond Index. High-yield bonds represented by Bloomberg US Corporate High Yield Index. Bank loans represented by Credit Suisse Leverage Loan Index.

Past performance does not guarantee future results. Index performance is not indicative of fund performance. Indexes are unmanaged and it is not possible to invest directly in an index.

Investors should consider a fund’s investment goal, risks, charges, and expenses carefully before investing. The prospectus and/or the applicable summary prospectus contain this and other information about the Fund and are available from AristotleFunds.com. The prospectus and/or summary prospectus should be read carefully before investing.

Investing involves risk. Principal loss is possible.

Foreside Financial Services, LLC, distributor.

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