It has been a very strong quarter for credit markets, although June turned out weaker.
The instability and uncertainty of markets continues to be supportive for both investment grade and high yield credit markets, because when outlooks are too bright, investors lose focus on credit metrics and focus on equity returns instead.
Britain voted to leave the European Union but global credit markets took it very mildly. Why? Our guess would be that many credit investors saw limited upside in a remain outcome but significant downside in a leave outcome. When the results were announced, we all sat there strategizing on when and how to add risk. As a result, the first dip has been rather short lived in credit.
Read Letter to shareholders - Value Bonds Q2 2016 - click here