Junk Bonds to Lose 1.5 Percentage-Point QE Cushion, Fridson Says
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Investors in junk bonds will lose a yield cushion of more than 1.5 percentage points as the Federal Reserve winds down its unprecedented quantitative easing program that’s bolstered credit markets for five years, according to Martin Fridson.
“Tapering has been delayed, but high-yield investors should nevertheless assume that the end of quantitative easing will eventually hurt their returns,” Fridson, chief executive officer of New York-based FridsonVision LLC, a research firm specializing in speculative-grade debt, wrote in a report yesterday.