High yield to thrive on economic improvements - Gledhill

Signs of economic recovery will create an attractive investment environment for high yield corporate bonds, Henderson New Star's James Gledhill says.

Gledhill, the group's director of retail fixed income, says Moody's predicts default rates peak at about 12% by the end of the year, about the levels of previous recessions. "The default rate is then anticipated to fall back sharply to 4.4% by the third quarter of 2010," the New Star High Yield Bond and Extra High Yield Bond manager adds. "Whilst past performance is not necessarily a guide to the future it is interesting to note that high yield bonds delivered double digit total returns for several years after both the 1990 and 2001 downturns."