Guggenheim First Quarter 2023 Outlook and Bank Lending: Credit Outlook 2023 and Lessons Learned from a Difficult Year

We believe that now is a good time to raise the quality ahead of any market disruptions in the coming months.

NEW YORK, Jan. 20, 2023 (GLOBE NEWSWIRE) — Guggenheim Investments, the global asset management and advisory business of Guggenheim Partners, today released its First Quarter 2023 Outlook and Bank Loans. Entitled “2023 Credit Outlook and Lessons Learned from a Tough Year,” the report discusses why we believe that many of the market developments seen in 2022 will reverse in 2023.

Among the highlights in the 16-page report:

  • High-yield bonds and bank loans produced a total income of 4.0 percent and 2.3 percent, respectively, in the fourth quarter of 2022, with the improvement of bonds in the decline of income.1

  • The strong growth in corporate income caused the leverage ratio to drop below the COVID level and supported high interest rates despite the increase in borrowing costs.

  • Heading into a recession this year, we believe borrowers are more healthy than sick.

  • As economic data improves further, however, we expect corporate earnings to decline, travel trends to worsen, and increased job losses.

  • We are also more wary of the Federal Reserve’s insistence on making sure that inflation falls and stays low, and its willingness to destroy the economy in a recession in order to succeed.

  • Between the two sectors we prefer commercial banks to earn higher than bank loans this year from the total income due to the good credit quality of the sector. and if, as we expect, the longer the length the less the disorder.

  • For both groups, however, we are cautious and focus on finding value in high-end and retail structures.

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About Guggenheim Investments

Guggenheim Investments is the global asset management and advisory arm of Guggenheim Partners, worth more than $217 billion.2 in total assets in fixed income, equity, and other strategies. We focus on the return and risk of insurance companies, corporate and government pension funds, sovereign wealth funds, endowments and foundations, advisors, wealth managers, and senior investors. Our 250+ investment professionals perform rigorous research to understand market trends and identify competitive opportunities in often complex and underserved sectors. This approach to investment management has enabled us to provide innovative strategies that provide diversified opportunities and long-term results.

1. Source: ICE BofA High-Yield Index, Credit Suisse Leveraged Loan Index. 2. Guggenheim Investments’ assets under management as of 12.31.2022 and including leverage are $15.2bn. Guggenheim Investments represents the investment businesses of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Partners Advisors, LLC, Guggenheim Corporate Funding, LLC, Guggenheim Partners Europe Limited, Guggenheim Partners Japan Limited, GS GAMMA Advisors, LLC, and Guggenheim Partners India Management.

Investing involves risks, including the potential loss of ownership. Fixed income investing takes into account the potential for interest to rise, thereby reducing costs. Higher rate and unrated debt securities are more volatile than investment grade bonds and may be less liquid, which may increase the mobility. Investors in asset-backed securities, including mortgage-backed securities and collateralized loan obligations (“CLOs”), typically receive payments that are part interest and part return of principal. These payments can vary depending on the cost of the loan to be repaid. Certain asset-backed securities may have structures that make their response to interest rates and other factors difficult to predict, causing their prices to fluctuate and subject to risk and estimated costs. CLOs have the same risks as direct loan investments, such as debt, interest, leverage, down payment, liquidity, and equity. The loans are often below investment grade, may not be rated, and often offer a fixed or variable interest rate.

This material is distributed or provided for informational or educational purposes only and should not be construed as a prescription of any specific protection. , plans, or investment products, or constitute investment advice of any kind. This material is not provided as a guarantee, cannot be relied upon or related to making investment decisions, and is not a recommendation of an offer to buy or sell securities. The contents are not intended to be and should not be construed as legal or tax advice and/or legal opinion. Always consult a financial, tax and/or legal professional regarding your particular situation.

This material reflects the views of the author, and not those of Guggenheim Partners, LLC, or its affiliates. The opinions contained herein are subject to change without notice. The forward-looking statements, estimates, and other information contained herein are based on independent research and studies and other four source. The information contained herein was obtained from sources believed to be reliable, but accuracy is not guaranteed. Past performance is not indicative of future results. No representation or warranty is made as to the accuracy of, or liability for, results based on such information. No part of this material may be reproduced or referenced in any manner, without the express written permission of Guggenheim Partners, LLC.

Media Relations
Gerard Carney
Guggenheim Partners

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