Hermes' Lundie: Emergence of 'haves and have nots' offers 'real value' in HY credit

Hermes' credit team updates investors

A flight to quality in credit markets, which has seen investment grade continue to outperform high yield, will lead to an emergence of corporate 'haves and have nots' as companies struggle to obtain sponsorship, but it has created "substantially more attractive valuations" for investors, according to Hermes' head of credit Fraser Lundie.

In an online investor presentation from Federated Hermes' credit team on Friday (3 April), Lundie explained that the "level of idiosyncratic risk" emerging from slightly lower volatility and better liquidity has given investors clearer perspective on which "companies and securities have sponsorship and which do not". High drama in high yield: How Covid-19 and oil crisis double-whammy hit markets He added: "There is now a situation where lower quality companies are lacking sponsorship and underperforming. "We are only at the very beginnings of this, there is an emerging 'haves and h...