How to avoid the high-yield blow-ups

With spreads at historic tights and default rates set to rise, high-yield investors are nervous. The advice from the experts is to pick your credits carefully, stay in short-dated paper and keep an eye on interest rates. Laurence Neville guides a path through the high-yield minefield


There is a contradiction at work in the European high-yield market. On one hand, it is in rude health: spreads have tightened consistently for a year while huge deals such as Nordic Telephone's EUR2 billion issue at the end of April are flying out of the door. But at the same time, investors are nervous: Standard & Poor's reported a record number of entities at risk of downgrade in mid-April - 663, up from 659 the month before; and Moody's forecasts the speculative default rate for global high

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