SBAC - Aristotle Capital Corporate Credit Q1 2024 Commentary

2024-05-15 10:00:00 ET

Summary

• Aristotle Capital Management is an independent/employee-owned investment management organization that specializes in equity and fixed income portfolio management for institutional and advisory clients worldwide.
• The Aristotle High Yield Bond Composite returned 1.66% gross of fees (1.59% net of fees) in the first quarter, outperforming the 1.30% return of the ICE BofA BB-B U.S. Cash Pay High Yield Constrained Index.
• The Aristotle Short Duration High Yield Bond Composite returned 1.30% pure gross of fees (1.17% net of fees) in the first quarter, underperforming the 1.54% return of the ICE BofA 1-3 Year BB-B U.S.
• With the U.S. economy continuing to outperform expectations, one of the biggest risks is a scenario in which inflation reaccelerates and leads to persistently higher-for-longer rates.
• We expect the yield curve to steepen in 2024, with longer-end U.S. yields likely to be rangebound with a bias to the topside.

Summary

U.S. corporate credit markets ended the first quarter with mixed performance, as a strong rally across risk assets saw U.S. yields edge higher and corporate credit spreads narrow to near cycle tights. Longer duration bonds felt the impact of higher rates, and the Bloomberg U.S. Aggregate Bond Index ended the quarter lower, with a total return of -0.78%. Following a strong 2023, bank loans outperformed both high yield bonds and investment grade corporate bonds during the quarter, as the Credit Suisse Leveraged Loan Index gained 2.52%. High yield bonds benefited from tighter credit spreads, as the Bloomberg U.S. High Yield Corporate Bond Index returned 1.47%, while investment grade corporate bonds felt the impact of higher yields, as the Bloomberg U.S. Corporate Bond Index returned -0.40%....

For further details see: