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MB Global Partners CEO Maria Boyazny on how investors can gain from high-yield junk loans.
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-- thank you very much so concerns over year -- had sent the stock market on a roller coaster right here in the US US treasury yields as you know falling to rock bottom levels.
Many investors have been looking a high yield otherwise known -- junk bonds and junk loans as well to make some money interesting way to play the markets right now but has -- a way to power of your portfolio.
Maria but Aussie is the CEO Andy global partners and she joins us now there -- huge piece in the journal this morning about junk loans leveraged -- A different way to play not to jump up -- the leverage loan.
-- make about would you take that kind of risk.
Good afternoon everyone while we spent a decade leading up to the financial crisis the levering up.
Naturally it would take several years -- -- to do lever.
Investors are on the quest for yields -- and high you called leveraged loans if you look at its own fund flows.
There's been almost nineteen billion dollars this year alone going into long funds.
Sorry high yield funds -- -- funds I he's.
Ability brainer considering you're only getting paid one and a half percent of through Monday today's on the ten -- -- but they're gotta be risks with junk and that's -- we call it junk.
What's the default -- like right now absolutely.
Well right now it's very deceptive the default rate has been a very low.
However there are a lot of risks associated with high yield bonds.
It's a big opportunity off for specialist investors and distressed and special situations like an -- global partners.
But for investors that -- holding these securities at par.
In this continue the buyer of to levering.
As a rates go up and is that more problems in the economy you can see a lot of potential.
For a significant price -- I don't think -- interest rates are going up anytime soon.
He's -- -- -- itself if you look at the Fed Funds futures perform if they're pushing that out to 2015 now.
Absolutely and I think that in the short to medium term.
You could still hang in there and collected yield we'll be prepared just like we saw on the financial crisis when bad news com.
Volatility comes and -- -- -- rich get US treasuries I mean would he think is the right asset allocation terms of fixed income.
I think that's look treasury is -- -- is essentially returned three risk right now on the real basis.
So I think that it is fine to have a fixed income allocation.
Which comprises both investment grade and non investment grade securities.
But have a plan especially going into rising interest rate environment.
Which is down the road but still have a plan maybe it consistent reduction all of your allocation to non investment grade securities particularly high yield bonds which I think we'll get her.
Our Maria by -- thank you very much Maria very actually take from camp thank you ladies.
