Gledhill eyes further gains as junk yields hit two-year low

The yield available on European sub-investment grade debt has fallen to a two-year low as the default rate on the Continent continues to run at almost zero.

Yields on European speculative-grade bonds, also known as high yield, have fallen to 7.62%, which is the lowest since July 2007, according to Bloomberg and Bank of America Merrill Lynch index data. However, Henderson high yield specialist James Gledhill says the space continues to offer considerable value as the spread over government bonds remains at historically elevated levels. "While the actual yield on offer may be at a two-year low, you are getting 7% when short-term rates in the UK and Europe are minimal," Gledhill says. The default rate in Europe fell to 3.5% at the end of ...