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Bank Loan Update

Floating rate bank loans are enjoying a profitable 2015. Coming into 2015, floating rate loans were one of the few bond sectors where average prices were meaningfully below par, at $95.39 for the S&P/LSTA index. Bargain shopping, particularly among institutional investors, has bid prices higher to $96.54 as of 5/15, leading to a total return including income of 3.2%.

We believe floating rate bank loans have continued modest capital appreciation potential this year, provided the economy remains firm and the Federal Reserve remains on track to raise interest rates. In the meantime, we expect continued attractive income (fund yields typically range between 4-5%), and perhaps even rising income if the Fed is assertive in raising rates.5.20.15

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

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