High yield issuers

Investments in securities issued by high yield companies.

• Bank loans are an attractive part of the capital structure since they have priority over other bondholders in the firm's assets.
• Bank loans can enhance recovery values because they are senior in the capital structure and generally secured by a lien on the firm's assets, providing priority over other debt holders.
• These companies often have a holding company structure from which it can issue bonds but is reliant on the ability of operating subsidiaries to move cash to the holding company to pay bondholders which may be restricted by covenants, even if they are senior bonds.
• Bonds can be issued out of a holding company but assets and cash flows are typically resident at operating companies which may be restricted by covenants from up streaming funds to the holding company even for the payment of senior bonds.