Leveraged loans outperformed junk bonds, with their lead margin being the largest since 2023.

Due to the turmoil in the Middle East conflict, some borrowers have shifted their debt financing towards the loan market. According to the Morningstar LSTA index, as of this Thursday, the total return rate for leveraged loans in the US market in March was 0.64%. In comparison, a Bloomberg measure showed that high-yield bonds lost 1.49%. Data shows that the last time such a large difference occurred was in September 2023, when loans outperformed junk bonds by 2.145 percentage points. Looking at the performance from the beginning of the year until now, loans have also shown more resilience: leveraged loans fell by 0.45%, while junk bonds fell by 0.81%.