High Yield Bond Outlook For 2021

High Yield Bond Outlook For 2021

https://seekingalpha.com/article/4396869-high-yield-bond-outlook-for-2021

High yield corporate bonds posted solid total returns of 7% on average in 2020. 

With the yield-to-worst from the high yield corporate bond index near all-time lows, there is less upside as we move into 2021.

High yield corporate bond upside is in part capped by negative convexity as a large swath of the market is pricing at or above their next call price.

When I discussed this market in April, the high yield corporate bond market was "positively convex" - limited downside and solid upside. Just eight months later, the opposite may be true.