US High-Yield Newsletter – H1’25

The US HY bond market navigated a volatile first half of 2025, delivering a +4.6% YTD return, outperforming IG credit but trailing other risk assets like EM equities (+13%) and gold (+10%). During 1Q 2025, tariff uncertainty and recession fears led to a risk-off environment, with HY underperforming IG. Later in 2Q 2025, easing macro risks fueled a risk-on rotation, with HY outperforming (+3.5% in Q2 vs IG’s +1.8%). Spreads widened in Q2, particularly for CCC-rated credits due to downgrades and Fed hawkishness.

HY Issuance volumes slowed, down 23% YoY to $79B, as companies faced higher funding costs and selective investor appetite. Healthcare and materials saw increased issuance, while energy and communications lagged. TransDigm Inc (TDG), IQVIA Inc (IQV), Voyager Parent LLC (EVRI), and Herc Holdings Inc (HRI), led the HY issuances market with the largest issues.