Credit where credit’s due; refining European high-yield indexes for the post-Covid economy

High-yield markets performed strongly despite Covid…

Given the scale of the initial deflationary shock and deep contractions in activity, resulting from Covid, and economic lockdowns in 2020/21, high-yield (HY) credit indexes have performed favourably. After the initial spike in spreads in March 2020, Chart 1 shows how strongly HY has rallied in both the US and Eurozone, with spreads now below pre-Covid levels.

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