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 200