Global High Yield Update – Q4 2023

A combination of global inflation showing signs of cooling, better-than-expected corporate earnings, and an apparent end to DM hiking cycles saw Global High Yield return in the low teens for 2023. Even with a refinancing wave coming, lack of large problem sectors and the presence of a private credit backstop make us expect a longer, but shallower defaults cycle this time, with N12M expected defaults for US HY at 3.0–3.5%, and EUR HY at 2.0–2.5%.