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A Few Things About High Yield You Never Knew (but were afraid to ask)

A Few Things About High Yield You Never Knew (but were afraid to ask)

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Published by Symfonie Capital
An overview of the risk / reward characteristics of high yield bonds. High Yield historically has been a far better investment over time than equities!
An overview of the risk / reward characteristics of high yield bonds. High Yield historically has been a far better investment over time than equities!

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Categories:Types, Business/Law
Published by: Symfonie Capital on Sep 16, 2013
Copyright:Attribution Non-commercial

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A Few Things You Should KnowAbout High Yield Bonds (but wereafraid to ask)
London: 16 High Holborn, WC1V 6BX
Prague: Klimentska1216 / 46 110 29 Praha 1
 T: +44 20 8616 7311 F: +44 20 8616 7499T: +420 222 191 008 F: +420 222 19 1200
This publication has been prepared by Symfonie Capital (Symfonie) for information purposes only. It is not an offer or solicitation for thepurchase or sale of any financial instrument. Reasonable care has been taken to ensure that the information contained herein isnotuntrue or misleading, but no representation is made as to its accuracy or completeness. The views and opinions expressed in thisdocument are those of its author(s) and do not necessarily reflect those of Symfonie. No reliance should be placed on this document for the purposes of making an investment decision. Neither Symfonie, its officers, directors, nor the author(s) of this document acceptliability for any loss arising from any investor arising from any decision to rely on this document. Symfonie, its affiliates and any of its or their officers may have financial interest in any transactions, securities or commodities referred to herein. Symfonie, or its affiliates, mayperform services, for, or solicit business from, any company referred to herein. This document is confidential and proprietary toSymfonie. Transmission or publication of this document without the express prior consent of Symfonie is strictly prohibited. SymfonieCapital reserves all legal rights in connection with the publication of this document. ©Symfonie Capital 2012.
 
Private and conditional. Unauthorised distribution strictly prohibited. ©2012 Symfonie Capital LTD2
High Yield Beats Equity in the Long Term
Between 1995 and2012 European High Yield returned 377%while EuropeanEquities returned176%.Between 1986 and2012 US High Yieldreturned 1040%while US Equitiesreturned 650%.
Source: Bloomberg, CSFB, S&P 500, DowJonesStoxx50
US High Yield vs. Equities
020040060080010001200
   1   9   8   6   1   9   8   8   1   9   9   0   1   9   9   2   1   9   9  4   1   9   9   6   1   9   9   8   2   0   0   0   2   0   0   2   2   0   0  4   2   0   0   6   2   0   0   8   2   0   1   0   2   0   1   2
1986 - 2012
   I  n   d  e  x   1   9   8   6  =   1   0   0
High Yield BondsEquities
European High Yield vs. Equities
0100200300400500
   1   9   9   5   1   9   9   6   1   9   9   7   1   9   9   8   1   9   9   9   2   0   0   0   2   0   0   1   2   0   0   2   2   0   0   3   2   0   0  4   2   0   0   5   2   0   0   6   2   0   0   7   2   0   0   8   2   0   0   9   2   0   1   0   2   0   1   1   2   0   1   2
1995 - 2012
   I  n   d  e  x   1   9   9   5  =   1   0   0
High Yield BondsEquities
 
Private and conditional. Unauthorised distribution strictly prohibited. ©2012 Symfonie Capital LTD3
High Yield Offers Rewards
Source: Credit Suisse, Symfonie Capital, Data through 31 December 2009
High Yield and EM offersignificant yield premium toBBBMany BB and BBB EMcorporateshave muchbetter credit metrics thanhigh yield counterparts, butoffer same or better yieldsGood credit researchbrings rewards overtime.
Bond Spreads - Higher Rated
0200400600800100012001400
   2   0   0  4   2   0   0   5   2   0   0   6   2   0   0   7   2   0   0   8   2   0   0   9   2   0   1   0   2   0   1   1   2   0   1   2
2004-2012
   S  p  r  e  a   d  v  s .   B  e  n  c   h  m  a  r   k   (   b  p   )
WE BBBBBB EM CorporatesSplit BBB HY
Bond Spreads - Lower Rated
05001000150020002500300035004000
   2   0   0  4   2   0   0   5   2   0   0   6   2   0   0   7   2   0   0   8   2   0   0   9   2   0   1   0   2   0   1   1   2   0   1   2
2004-2012
   S  p  r  e  a   d  v  s .   B  e  n  c   h  m  a  r   k   (   b  p   )
WE BBWE BEM BBEM B

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