Data as of July 31, 2019 unless otherwise noted.

Bloomberg Barclays U.S. Aggregate Bond Index (Barclays Agg) 0.22% 6.35%
ICE BofAML U.S. High Yield Master II Index (HY Bonds) 0.51% 10.72%
S&P/LSTA Leveraged Loan Index (Senior Secured Loans) 0.80% 6.58%
Performance data quoted represents past performance and is no guarantee of future results. An investment cannot be made directly in an index.

Leveraged credit gains in July: The leveraged credit markets rose in July, with senior secured loans outperforming high yield bonds for the first time since May. Both high yield bonds and senior secured loans gained amid rising U.S. equity prices and expectations of a rate cut by the U.S. Federal Reserve. After rallying significantly in June, high yield bonds recorded a small gain in July as inflows into the asset class accelerated.1 High yield bond mutual funds pulled in approximately $3.3 billion in July and have now experienced $15.7 billion in inflows year to date.2 Senior secured loans returned 0.80% in July even as outflows from bank loan mutual funds persisted. Investors pulled nearly $2.0 billion from bank loan mutual funds in July, which marked the 10th straight monthly outflow from the asset class. More broadly, the Barclays Agg eked out just a small gain in July as U.S. Treasury yields remained relatively stable leading up to the Fed’s first rate cut since 2008.

Higher-rated credit continues to outperform: Drilling down deeper into leveraged credit returns, higher-rated areas of the market generally outperformed their lower-rated peers. In July, BB rated bonds returned 0.6%, while CCC rated bonds returned -0.07%.3,4,5 Similarly, BB rated senior secured loans returned 0.79% in July, while CCC rated senior secured loans returned 0.53%. Higher-quality areas of the market have outpaced their lower-quality peers throughout 2019 amid slower growth and declining U.S. Treasury yields. For context, BB rated bonds and BB rated senior secured loans have returned 11.4% and 7.1%, respectively, year to date.3,6 By comparison, CCC rated bonds and CCC rated senior secured loans have returned 8.5% and 5.3%, respectively, through the same period.5,6


  • Leveraged credit rose this month alongside equities, with loans outperforming high yield for the first time since May. The Agg was slightly positive as rates remained relatively rangebound leading up to the Fed’s July 31 rate decision.

1 ICE BofAML U.S. High Yield Master II Index.
2 Thomson Reuters Lipper.
3 ICE BofAML U.S. High Yield BB Index.
4 ICE BofAML U.S. High Yield B Index.
5 ICE BofAML U.S. High Yield CCC Index.
6 S&P/LSTA Leveraged Loan Index.

Index descriptions: Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency). ICE BofAML U.S. High Yield Master II Index is designed to track the performance of U.S. dollar-denominated below investment grade corporate debt publicly issued in the U.S. domestic market. S&P/LSTA Leveraged Loan Index is a market value-weighted index designed to measure the performance of the U.S. leveraged loan market.

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