Q2 ‘2023 High Yield Investor Survey

The results are in – thank you for taking part

The Q2 2023 Bloomberg Intelligence x European High Yield Online High Yield Investor Survey shows Investors have flipped back to being cautious after a brief overweight that reflected cheap valuations.

It seems that the European High Yield Market may have come too far too fast. Across all questions investors look to have taken a much more defensive approach with an expectation of negative returns for Q2 and no investor, not one, is saying that high yield spreads are cheap.

The High Yield Investor Survey sector and rating allocation is much as you would expect it. Defensively positioned with Investment Grade preferred over High Yield, single Bs are an underweight now, Non Cyclicals over Cyclicals and cash balances have reached survey highs of c.7%

2.4 defaults are predicted this quarter with the first actual default recorded in Q1.

The High Yield Investor Survey’s bearish tone does not impact supply though with more than €11bn in new issuance expected during the quarter.

Overall European High Yield Investors are becoming more cautious. The problem I see is that spreads are unlikely to blow out any time soon without much softer economic data and earnings.

Perhaps a Central bank may drop the ball, but its hard to see a gap wider in the next quarter. The probability increases IMHO in Q3 and Q4.

Thank You

Thanks to everyone who took part.

And a big thank you to Mahesh and Heema for their analysis.

Download the Survey here

Investors are More Defensive