Even [Korea goyounghun financial newspaper reporter] interest rate upturn only the high yield bond investment is not favorable opinions emerged.
The 3rd Korea Financial Investor Protection Foundation, said that the financial sector is difficult to look like high yield bonds (funds) the interest rate upturn two euros, but high yield bonds (funds) invest unconditionally glass.
Generally stable can enjoy a high coupon and get a high yield bond trading profits to price increases because the US economy to improve once the corporate interests gotta increased default rates are falling. This is why it is a relatively high rate of interest than shorter maturity bonds with high credit ratings are less affected by rising interest rates.
Financial Investor Protection Foundation gimjeongin researchers "default rate for speculative-grade bonds is higher even than the default rate for investment-grade bonds are also visual concerned about the impact of future interest rate rises" and "price fluctuation risk of interest rate fluctuations is limited and held-to-maturity When he explained yen may vary "If you invest in the fund price changes due to interest rate fluctuations prior to maturity may not have the impact on the bottom line, but.
Due to the rise in interest rates but rather it emerged even opinion that default rates could rise.
Kim Researchers company while refinancing the said "companies low interest rates for future interest rates rise debt" Article 1 speculative grade corporate bonds over the dollar is concentrated in the next five years maturity approached that of the 402 billion US dollars-scale debt maturities in 2021 "with high interest rate debt to weaken the ability to generate cash flow were diagnosed as may adversely affect the ability to repay. "
If followed by a rise in market interest rates faster than the corporate business environment, improve the speed of a determination that the burden can not go in particular. The increase in corporate profits rather obsolete in the financial restructuring of the company but rather may increase the investment in anticipation lead to a vicious cycle of increasing debt.
He added, "Atlanta Fed announced first quarter gross domestic product (GDP) growth rate in March fell more than in January to 1%" and "high yield bonds are even sensitive to the economic situation, the economy as a whole are not a big shock default risk despite increases or it can increase the variability explained that it "should be noted.
High yield bonds is that you have greater volatility than investment grade bonds and the loss can also occur as a recession.
In addition, changes in high yield bonds total revenue showed a correlation between the change in the high yield bond spreads and strong negative added that said additional upside to the state's current spread levels are already falling much greater.
Financial Investor Protection Foundation side to return to the default of the investment was emphasized that the interest rate upturn even enough to risk high yield bonds (funds) to be judged.
Daily Economic News Finance FNTIMES - commercial reprint, copy, distribute prohibited purposes under the Copyright Act
Copyright ⓒ Korea's Financial News & FNTIMES.com
