NYLI MacKay High Yield Corporate Bond Fund Q1 2025 Commentary

2025-07-01 06:21:00 ET

Market Review

• High Yield posts positive returns despite March volatility
  • The ICE BofA U.S. High Yield Index declined 1.07% in March, brining first quarter returns to 0.94%.
  • Yields and spreads moved in lockstep for most of the year until late February, when concerns of persistent inflation and policy uncertainty on tariffs caused spreads to widen.
  • Spreads oscillated between 275bps and 300bps before widening in March by 64bps to end the quarter at 375bps.
  • Yields increased 57bps in March and higher by 26bps for the quarter, to end at 7.73%.
• Supply/Demand technicals are still supportive of U.S. High Yield
  • U.S. High Yield gross issuance in March came in at $26.6bn, bringing first quarter totals to $68.3bn. Issuance continues to be higher quality, with just 1.7% issuance rated CCC.
  • High yield mutual funds/ETFs posted an inflow of $1.8bn in March and $7.3bn for the quarter.
• Higher quality bonds outperform, almost all sectors positive for quarter.
  • CCCs declined 2.72% in March, bringing their Q1 returns negative to 0.67%. In contrast, BBs and single-Bs lost 0.56% and 1.31%, respectively – posting positive returns in the quarter of 1.45% for BBs and 0.70% for single-Bs.

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