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Weekly Market Summary


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Extra Credit*

  • Investment-grade issuance in September was $125 billion, which was about in-line with the past four-year average of $129 billion. For the quarter, investment-grade supply was $286 billion, which was down 4% versus the average pace of $297 billion. Overall, year-to-date supply totals $998 billion. Looking ahead, supply in October typically slows versus September (18 out of 23 years in our history). Issuance has averaged $88 billion in October and $100 billion in November over the past four years, excluding 2020). There were two key trends in the third quarter: an increase in floater supply and a dearth of long-end issuance. The average maturity of new issues in third quarter was 8.3 years, the lowest quarterly average tenor since the third quarter of 2008.
  • High-yield capital market activity increased to its highest since January 2022. Specifically, $24.6 billion of high-yield bonds priced in September. High-yield issuance totals $137 billion year-to-date, which compares to $90 billion year-to-date 2022.
  • Leveraged-loan gross issuance totaled $58 billion in September, the highest since November 2021, albeit only $17.3 billion was excluding refinance. As such, year-to-date institutional loan issuance totals $258 billion or $59 billion net of refinancing/re-pricing, compared to $205 billion or $145 billion last year.
  • U.S. collateralized loan obligations (CLOs) gross supply in September totaled $12.5 billion from 28 CLOs. This was the third heaviest gross issuance month in 2023. U.S. CLO gross supply now totals $93 billion, which is down -27% year-over-year, and new issue supply is down -21% year-over-year.
  • Default activity moderated in September following an active August. As well, distressed exchange activity outpaced default activity for a fourth consecutive month, and as a result, distressed transactions now equal defaults on a year-to-date basis. Specifically, one company defaulted and three completed a distressed exchange in September totaling $3.1 billion in bonds and loans ($1.8 billion in bonds and $1.3 billion in loans). By comparison, 11 companies defaulted or completed a distressed transaction in August totaling $6.1 billion. For context, a monthly average of $7 billion of bonds and loans have been affected by default/distressed exchange activity thus far in 2023. Default/distressed exchange volume totaled $11.5 billion in the third quarter, the lowest quarterly total year-to-date, following elevated totals of $30.8 billion in second quarter and $20.8 billion in the first quarter.
  • The trailing 12-month default rates for bank loans and high-yield bonds, excluding distressed exchanges, finished the month at 1.90% and 1.32%, respectively, down from 2.24% and marginally higher from 1.29% from August. The long-term historical default rate for loans and high-yield bonds is 3.1% and 3.2%, respectively.

Sources: Bloomberg and JP Morgan as of 10/3/23.

Yield as of:
Oct 6, 2023
High-Yield Bonds
Investment-Grade Corporates
Last Week
Prior Week
Start of the Year
Option Adjusted Spread as of:
Oct 6, 2023
High-Yield Bonds
Investment-Grade Corporates
Last Week
422 bps
530 bps
115 bps
Prior Week
394 bps
518 bps
112 bps
Start of the Year
469 bps
592 bps
121 bps
Prices as of:
Oct 6, 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. The red and green arrows depicted under Yields, Option Adjusted Spreads, and Prices indicate a higher or lower value from the previous week.

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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