SPHY - SPHY ETF: Be Very Careful (Rating Downgrade)
2024-04-03 23:37:47 ET
Summary
- SPDR Portfolio High Yield Bond ETF faces significant credit risk headwinds due to economic softening.
- The ETF's option-adjusted spread, paired with its duration figures, spell excess credit duration influence.
- Credit migration could play a role later this year as speculative grade, BB, and BB interest coverage ratios are fading.
- SPHY's consistent dividend can save its fortunes. However, we think the ETF will be more investable in the future than it is now.
- Downgraded to Hold.
We recently authored an article about the iShares iBoxx $ Investment Grade Corporate Bond ETF ( LQD ), in which we provided a bullish view of investment-grade bonds. However, today, we turn our attention to the SPDR Portfolio High Yield Bond ETF ( SPHY ) to update our outlook on the vehicle amid an uncertain time for credit-sensitive securities....
SPHY ETF: Be Very Careful (Rating Downgrade)