Alcentra advocates leveraged loans over high yield

Debt investors should opt for senior secured loans, not high yield bonds, according to the chief investment officer of Alcentra, BNY Mellon Asset Management’s specialist high yield unit.

The risk-return for senior secured loans is “stupendously attractive,” says Alcentra's CIO, Paul Hatfield. Yields vary between 7% and 9%, with margins of 350 basis points to 500bp over Libor, and discounts on issuance of between 2% and 3%. New issues also feature Libor floors.

Pre-crisis, however, spreads of