In today’s briefing:
- High Yield Bonds: Defaults Rising to 5.0% but Spreads in Lalaland
- AFC Iraq Fund Enjoys a Surprise Boost – Asia Frontier Capital (AFC) – February 2023 Update
High Yield Bonds: Defaults Rising to 5.0% but Spreads in Lalaland
- The swiftly growing number of participants in the Fed Senior Loan Officer Survey signaling tighter lending standards for Commercial and Industrial loans suggests a 2023 default rate above 6%.
- Improved high yield quality and still low interest expenses put our 2023 default estimate at 5.0%, with potential contagion risk coming from the CMBS market.
- In any case, spreads do not reflect a higher default rate, let alone a recession, and remain too low to provide value. Underweight High Yield Corporate Bond ETF (HYG US)
AFC Iraq Fund Enjoys a Surprise Boost – Asia Frontier Capital (AFC) – February 2023 Update
- The AFC Iraq Fund Class D shares returned +23.3% in February 2023 with a NAV of USD 833.91, underperforming its benchmark, the Rabee Securities RSISX USD Index (RSISUSD index), which gained 25.0% during the month.
- The fund is up 22.6% year to date versus 18.8% for the index. Since inception, the fund has lost 16.6% while the RSISUSD index is down 37.6%.
- The performance of the fund and the index were positively affected by two crucial decisions taken by the Central Bank of Iraq (CBI).
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