Comments on: Looking Under the Hood at High-Yield Bank Loans http://blog.alliancebernstein.com/index.php/2013/01/03/looking-under-the-hood-at-high-yield-bank-loans/?utm_source=rss&utm_medium=rss&utm_campaign=looking-under-the-hood-at-high-yield-bank-loans The AllianceBernstein Blog on Investing Fri, 24 May 2013 12:06:21 +0000 hourly 1 http://wordpress.org/?v=3.4.1 By: Ashish Shah http://blog.alliancebernstein.com/index.php/2013/01/03/looking-under-the-hood-at-high-yield-bank-loans/#comment-125309 Ashish Shah Thu, 11 Apr 2013 15:20:26 +0000 http://blog.alliancebernstein.com/?p=3412#comment-125309 While we do think there is a place for high-yield bank loans in a multisector portfolio, we still believe and our research strongly suggests that shorter-maturity (one- to five-year) and higher-quality (BB and B) high-yield corporate bonds are a superior approach, because they provide a higher risk-adjusted potential return than do loans. That said, if you are looking to include high-yield loans in a portfolio, we believe that investors should focus on USD-denominated loans, as they are the most liquid in the market. In addition, we invest mainly in credits rated BB and B, because the potential upside from CCC is not worth the extra risk, in our analysis. Finally, we look very carefully at the covenants to make sure we are being compensated adequately in the event of a cov-lite issue. While we do think there is a place for high-yield bank loans in a multisector portfolio, we still believe and our research strongly suggests that shorter-maturity (one- to five-year) and higher-quality (BB and B) high-yield corporate bonds are a superior approach, because they provide a higher risk-adjusted potential return than do loans.

That said, if you are looking to include high-yield loans in a portfolio, we believe that investors should focus on USD-denominated loans, as they are the most liquid in the market. In addition, we invest mainly in credits rated BB and B, because the potential upside from CCC is not worth the extra risk, in our analysis. Finally, we look very carefully at the covenants to make sure we are being compensated adequately in the event of a cov-lite issue.

]]> By: ralph nicosia http://blog.alliancebernstein.com/index.php/2013/01/03/looking-under-the-hood-at-high-yield-bank-loans/#comment-113066 ralph nicosia Thu, 04 Apr 2013 12:58:38 +0000 http://blog.alliancebernstein.com/?p=3412#comment-113066 considering including floating rate funds in a portfolio, what would be your approach and would you look for in the selection process? thanks. considering including floating rate funds in a portfolio, what would be your approach and would you look for in the selection process? thanks.

]]> By: Nina5 http://blog.alliancebernstein.com/index.php/2013/01/03/looking-under-the-hood-at-high-yield-bank-loans/#comment-42388 Nina5 Fri, 18 Jan 2013 12:31:20 +0000 http://blog.alliancebernstein.com/?p=3412#comment-42388 I found out that CFOs also wonder if high-yield bonds are the best solution to refinance their debt. Here is an interesting article to dig deeper into the subject http://www.cfo-insight.com/financing-liquidity/loans-and-bonds/cfos-profit-from-lowest-ever-bond-yields/ I found out that CFOs also wonder if high-yield bonds are the best solution to refinance their debt.

Here is an interesting article to dig deeper into the subject
http://www.cfo-insight.com/financing-liquidity/loans-and-bonds/cfos-profit-from-lowest-ever-bond-yields/

]]> By: Paul Nathe http://blog.alliancebernstein.com/index.php/2013/01/03/looking-under-the-hood-at-high-yield-bank-loans/#comment-35323 Paul Nathe Fri, 04 Jan 2013 17:24:53 +0000 http://blog.alliancebernstein.com/?p=3412#comment-35323 Thank you. Still, I would not ask these guys to go car shopping with anyone. Heated seats? Back up TV? GPS? The first has never appealled, and the next two are cheap to add on to any vehicle. Anti-lock brakes, traction control, and new top-line tires......that''s more to my thinking. The caution on bank loans is very valuable to me, and I am happy to take their advice on the high yield market. Happy New Year to your entire team. Thank you. Still, I would not ask these guys to go car shopping with anyone. Heated seats? Back up TV? GPS? The first has never appealled, and the next two are cheap to add on to any vehicle. Anti-lock brakes, traction control, and new top-line tires……that”s more to my thinking. The caution on bank loans is very valuable to me, and I am happy to take their advice on the high yield market. Happy New Year to your entire team.

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