RBS strategists forecast that high-yield bonds will return 8.3 percent in 2013, compared with a 0.6 percent gain for investment-grade notes, Kamford said.
The 12-month trailing global speculative-grade default rate fell to 2.8 percent at the end of the second quarter from 3.1 percent in the same period last year, Moody’s said July 11. The ratings firm expects the rate to rise to 3.2 percent by year- end.
“Default rates are close to historic lows and are expected to stay that way for the foreseeable future,” Kamford said. “We prefer high yield versus investment grade due to the extra coupon cushion it provides.”