The return of yield to the high yield market
November 2015
High yield credit
I N B R I E F
• As market participants worry about global growth, high yield bonds have come under pressure along with other risk assets. Yields are the highest they have been since the eurozone crisis of 2011, and spreads have widened well above their long-term average. Price declines initially hit energy- and commodity-related issuers but subsequently moved to many other sectors. Yield and opportunity have returned to the high yield market.
• High yield issuers are mainly exposed to developed markets, and prospects are relatively good for developed markets’ economic growth. As we approach a Federal Reserve (Fed) tightening cycle, we do not expect a U.S. recession in the near term. • We are in the middle stage of the credit cycle. Economic conditions have not been
sufficiently robust to encourage aggressive behavior on the part of either investors or issuers. Issuer restraint can be seen in default rates well below their long-term average. • Investors should not fear a rate hiking cycle. Spreads typically do not widen
substantially until well after the end of the cycle, when credit conditions are tighter.
Joshua McGee
Executive Director, Client Portfolio Manager, High Yield, Global Fixed Income,
Currency & Commodities Group, J.P. Morgan Asset Management
David Seaman
Managing Director, Client Portfolio Manager, High Yield, Global Fixed Income,
Currency & Commodities Group, J.P. Morgan Asset Management
AUTHORS
Concerns about global growth, led by continued uncertainty over the severity of the slowdown in China, have pressured risk assets. The possibility of negative returns for all risk assets has increased dramatically over the last few months; risk has re-priced.
Unsurprisingly, the high yield market has not been immune. Between June 1 and September 30, 2015, high yield bonds posted four consecutive months of negative returns, for the first time in over 20 years. Yields rose above 8.00%, the highest they have been since the eurozone crisis in the fourth quarter of 2011; spreads over Treasuries moved to around 660 basis points (bps),1 about 60% wider than they were a year ago and above their long-term average of 575bps. Price declines first hit energy and commodity-related sectors, but recently many other sectors have felt the sting. To put it plainly, yield has returned to the high yield market.
October has proved to be kinder to the high yield market, returning 2.73% month to date through October 28, 2015. Looking past the daily market ups and downs, we believe the current environment presents an attractive opportunity for fixed income investors. In the following pages, we explain why yields have recently risen and spreads widened; assess the market’s economic fundamentals and valuation metrics; and consider the outlook for high yield in a rate hiking cycle.
1 Throughout this paper, statistical references to high yield bonds are sourced from the Bank of America Merrill
MARKET SNAPSHOT
During the earlier years of the high yield market, the 1980s and 1990s, issuers of below-investment grade debt were gener-ally smaller, private companies with limited financial reporting requirements; secondary market information and activity were opaque. Today’s high yield market is quite different. (In this paper, we examine the universe of developed markets high yield debt; emerging markets debt is beyond the scope of this analysis.) The developed markets high yield universe is a USD 1.3 trillion market, with 1,100 unique issuers, 40 distinct industries and an average issue size of $600 million. Issuers have risk exposure to countries that are members of the G10 and Western Europe; 83% of issuers are domiciled in the U.S. Many are public companies with market-leading positions in their respective lines of business.
Recently, market participants have focused on potential strains on bond market liquidity. Some worry especially about retail outflows, after years in which retail investors moved substantial assets into high yield bond funds ($105 billion between January
1, 2006, and December 31, 2012). Between February and August, Lipper reports, $19 billion exited high yield bond mutual funds, but in late October the tide shifted somewhat, with a near-record $3.3 billion of high yield inflows in the week of October 23. As we consider bond market liquidity, we note that the high yield market has never been more transparent. All secondary trades, whether 144A or publicly registered, are now posted on the NASD Trade Reporting and Compliance Engine (TRACE) reporting system. An average of over $10 billion of high yield volume trades every day. High yield bonds today represent a critical component of global capital markets and an important element in a diversified fixed income portfolio.
THE CASE FOR HIGH YIELD: ECONOMICS
The case for high yield begins with economic fundamentals (EXHIBIT 1). High yield issuers do have cash flow exposure to emerging markets, primarily in the energy- and commodity-sensitive sectors, but broadly speaking, cash flows are dominated by developed markets, where prospects for
Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Ju
l-15 Aug-15 Sep-15 Global 51.9 52.8 52.9 52.9 53.1 52.4 51.9 52.1 52.6 52.4 52.5 52.2 52.2 51.8 51.5 51.7 51.9 51.7 51.0 51.3 51.0 51.0 50.7 50.6 Developed markets 52.7 54.2 54.4 54.6 55.5 54.3 53.2 53.5 54.1 53.2 54.1 53.6 53.5 52.8 52.4 52.3 52.6 52.8 52.0 52.3 51.9 52.3 52.1 52.0 Emerging markets 50.9 51.1 50.9 50.6 50.0 49.6 49.5 50.1 50.4 51.2 50.5 50.4 50.5 50.6 50.4 50.7 50.9 49.8 49.2 49.4 49.2 48.7 48.2 48.4 U.S. 51.8 54.7 55.0 53.7 57.1 55.5 55.4 56.4 57.3 55.8 57.9 57.5 55.9 54.8 53.9 53.9 55.1 55.7 54.1 54.0 53.6 53.8 53.0 53.1 Canada 55.6 55.3 53.5 51.7 52.9 53.3 52.9 52.2 53.5 54.3 54.8 53.5 55.3 55.3 53.9 51.0 48.7 48.9 49.0 49.8 51.3 50.8 49.4 48.6 UK 56.4 57.8 57.3 56.6 55.9 55.2 57.2 56.6 56.8 54.8 53.0 51.5 53.4 53.4 52.8 52.9 53.9 54.1 51.7 51.9 51.4 51.9 51.6 51.5 Euro area 51.3 51.6 52.7 54.0 53.2 53.0 53.4 52.2 51.8 51.8 50.7 50.3 50.6 50.1 50.6 51.0 51.0 52.2 52.0 52.2 52.5 52.4 52.3 52.0 Germany 51.7 52.7 54.3 56.5 54.8 53.7 54.1 52.3 52.0 52.4 51.4 49.9 51.4 49.5 51.2 50.9 51.1 52.8 52.1 51.1 51.9 51.8 53.3 52.3 France 49.1 48.4 47.0 49.3 49.7 52.1 51.2 49.6 48.2 47.8 46.9 48.8 48.5 48.4 47.5 49.2 47.6 48.8 48.0 49.4 50.7 49.6 48.3 50.6 Italy 50.7 51.4 53.3 53.1 52.3 52.4 54.0 53.2 52.6 51.9 49.8 50.7 49.0 49.0 48.4 49.9 51.9 53.3 53.8 54.8 54.1 55.3 53.8 52.7 Spain 50.9 48.6 50.8 52.2 52.5 52.8 52.7 52.9 54.6 53.9 52.8 52.6 52.6 54.7 53.8 54.7 54.2 54.3 54.2 55.8 54.5 53.6 53.2 51.7 Greece 47.3 49.2 49.6 51.2 51.3 49.7 51.1 51.0 49.4 48.7 50.1 48.4 48.8 49.1 49.4 48.3 48.4 48.9 46.5 48.0 46.9 30.2 39.1 43.3 Ireland 54.9 52.4 53.5 52.8 52.9 55.5 56.1 55.0 55.3 55.4 57.3 55.7 56.6 56.2 56.9 55.1 57.5 56.8 55.8 57.1 54.6 56.7 53.6 53.8 Australia 53.2 47.7 47.6 46.7 48.6 47.9 44.8 49.2 48.9 50.7 47.3 46.5 49.4 50.1 46.9 49.0 45.4 46.3 48.0 52.3 44.2 50.4 51.7 52.1 Japan 54.2 55.1 55.2 56.6 55.5 53.9 49.4 49.9 51.5 50.5 52.2 51.7 52.4 52.0 52.0 52.2 51.6 50.3 49.9 50.9 50.1 51.2 51.7 50.0 China 50.9 50.8 50.5 49.5 48.5 48.0 48.1 49.4 50.7 51.7 50.2 50.2 50.4 50.0 49.6 49.7 50.7 49.6 48.9 49.2 49.4 47.8 47.3 47.2 Indonesia 50.9 50.3 50.9 51.0 50.5 50.1 51.1 52.4 52.7 52.7 49.5 50.7 49.2 48.0 47.6 48.5 47.5 46.4 46.7 47.1 47.8 47.3 48.4 47.4 Korea 50.2 50.4 50.8 50.9 49.8 50.4 50.2 49.5 48.4 49.3 50.3 48.8 48.7 49.0 49.9 51.1 51.1 49.2 48.8 47.8 46.1 47.6 47.9 49.2 Taiwan 53.0 53.4 55.2 55.5 54.7 52.7 52.3 52.4 54.0 55.8 56.1 53.3 52.0 51.4 50.0 51.7 52.1 51.0 49.2 49.3 46.3 47.1 46.1 46.9 India 49.6 51.3 50.7 51.4 52.5 51.3 51.3 51.4 51.5 53.0 52.4 51.0 51.6 53.3 54.5 52.9 51.2 52.1 51.3 52.6 51.3 52.7 52.3 51.2 Brazil 50.2 49.7 50.5 50.8 50.4 50.6 49.3 48.8 48.7 49.1 50.2 49.3 49.1 48.7 50.2 50.7 49.6 46.2 46.0 45.9 46.5 47.2 45.8 47.0 Mexico 50.2 51.9 52.6 54.0 52.0 51.7 51.8 51.9 51.8 51.5 52.1 52.6 53.3 54.3 55.3 56.6 54.4 53.8 53.8 53.3 52.0 52.9 52.4 52.1 Russia 51.8 49.4 48.8 48.0 48.5 48.3 48.5 48.9 49.1 51.0 51.0 50.4 50.3 51.7 48.9 47.6 49.7 48.1 48.9 47.6 48.7 48.3 47.9 49.1
Prospects for economic growth look relatively good across most developed markets EXHIBIT 1: GLOBAL PURCHASING MANAGERS INDEX FOR MANUFACTURING
Source: Markit, J.P. Morgan Asset Management Guide to the Markets; U.S. data are as of September 30, 2015.
126151 100 47 95 68 152 158 106 149 148 53 181 302 246 368399356 251286 0 50 100 150 200 250 USD (billions) 300 350 400 450 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD ’15 YTD ’14 Percent 0 5 10 15 20 25 30 35 40 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD ’15 YTD ’14 8 4 6 11 4 9 2 3 9 19 16 20 35 23 10 17 16 16 18 16 12 18 Percent 0 10 20 30 40 50 60 70 80 90 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD ’15 YTD ’14
Refinancing-related issuance Acquisition financing-related issuance
Percent
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD ’15 YTD ’14
Lower-rated, nonrefinancing issuance Wireline telecommunications
1.8 2.7 3.8 5.7 3.0 1.0 0.1 0.10.5 1.7 1.3 2.7 5.1 1.3 0.5 1.4 1.4 2.0 2.2 2.3 1.0 1.9 0 1 2 3 4 5 6 7
Issuers and investors remain relatively disciplined
EXHIBIT 2A: NEW-ISSUE VOLUME EXHIBIT 2B: HIGH YIELD USE OF PROCEEDS
EXHIBIT 2C: LOWER-RATED HIGH YIELD ACTIVITY* EXHIBIT 2D: AGGRESSIVE HIGH YIELD ISSUANCE
Source: Standard & Poor’s Leveraged Commentary & Data, J.P. Morgan Securities LLC; data as of September 30, 2015. *Lower-rated activity is credit rated Split B or below.
economic growth are relatively good. Looking at the world’s biggest developed market, the U.S., as we approach a Fed tightening cycle, we do not expect a U.S. recession in the near term. That is an important point: While negative return years in the high yield market are rare, appearing only five times in the last 29 years, they have most often occurred during U.S. recessions (1991, 2001 and 2008).
WHERE ARE WE IN THE CREDIT CYCLE?
Each stage of a business cycle carries a distinct set of economic and credit market characteristics. The current cycle began after the credit crisis of 2008, and many investors are ques-tioning if we have entered the late stage and can therefore anticipate a broader weakening of credit fundamentals. We believe we are in the middle stage of the credit cycle. Traditionally in late-stage credit cycles, we have experienced above-trend economic output, aggressive consumption, high levels of capital investment and high wage inflation, which have led to overly aggressive, optimistic issuer and investor behavior. In the current environment, on the other hand, U.S.
economic data has shown modest economic output, restrained consumption, relatively low capital investment and little wage inflation, leading to issuer and investor discipline.
Economic conditions have not been sufficiently robust to encourage widespread aggressive behavior on the part of either investors or issuers. Issuer restraint can be seen in modest default rates: The trailing 12-month default rate (par-weighted) of 2.29% is well below the long-term average of 3.99%. It is worth noting, too, that 75% of all defaults in the high yield market over the last 12 months have been in two sectors, energy and basic materials. Lower-rated issuance has declined, companies have reduced capital expenditures (capex), leverage remains reasonable, and interest coverage ratios are very strong. In another sign of mid-cycle behavior, market participants are demanding higher yields for acquisition-related deals of any significant size. For example, discerning investors significantly repriced recent deal-related issues by Altice/Cablevision and Frontier Communications, and that repricing in turn re-priced the cable and wireline telecom markets materially wider (EXHIBIT 2).
THE CASE FOR HIGH YIELD: VALUATIONS
Excess spread
The spread over Treasuries in the high yield market primarily serves to compensate investors for loss due to default. Excess spread is the spread above Treasuries after accounting for expected defaults. The greater the excess spread, the better. Excess spread can also be considered a cushion for investors for unexpected loss due to higher defaults or perhaps lower recovery rates. Excess spread should not be zero. As with all risk assets, excess spread should exist for unexpected volatility events that generally impact risk assets to a greater degree than risk-free assets. Various studies have shown that average excess spread for the high yield market over the last 25 years has been in the range of 250bps–300bps. Based on recent trading levels, we calculate the excess spread at 524bps, roughly twice the 25-year average (projecting the current default rate and assuming 40% recovery). In other words, spreads have considerable cushion to absorb a much higher rate of default (EXHIBIT 3).
Indiscriminate performance pressure
Sectors mainly exposed to developed markets growth have been indiscriminately pressured along with those sectors (energy, basic materials) more directly impacted by the slowdown in demand from China and other emerging markets. Consider: At the end of January, only two of 18 mid-level sectors posted negative year-to-date returns—energy and basic materials.
0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 0 2 4 6 8 10 12 14 16 18
Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98
Default rate low 1993 thru 1999 = 1.2% Average default rate = 2.5%
Average spread = 423bps
Default rate low 2003 thru 2007 = 0.3% Average default rate = 2.1%
Average spread = 448bps
Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15
HY spread to worst (bps)
Domestic HY default rate (%)
Domestic HY default rate Domestic HY spread to worst
Spreads have considerable cushion to absorb a much higher rate of default
EXHIBIT 3: JPMORGAN DOMESTIC HIGH YIELD INDEX AND TRAILING 12-MONTH DOMESTIC DEFAULT RATE
Source: J.P. Morgan Securities LLC. The above information is shown for illustrative purposes only.
At the end of September, seven of the mid-level sectors reported negative returns year-to-date: energy, -12.34%; basic materials, -7.42%; telecom -4.32%; media, -2.24%; financials, -0.85%; utilities -0.60%; and automotive, -0.21%. (In October, as flows increased and sentiment healed, those sectors retraced to higher levels.) The energy and basic materials sectors are more directly impacted by the slowdown in China’s demand. However, the vast majority of the remaining sectors are much more exposed to developed markets growth.
Charter Communications2 is an example of a high yield issuer with no emerging markets exposure. A publicly traded, leading U.S. Internet broadband company, Charter recently acquired Time Warner Cable. Charter has 4.5 turns of debt leverage and substantial free cash flow; its bonds are rated B1/BB-. Charter bondholders have considerable protection, with over $20 billion of equity market value beneath them in the capital structure. All of Charter’s revenues—100%—are generated in the U.S. Yet as of September 30, Charter 5¾ ’24 traded at $95.75, yielding 6.42%, or 505bps over Treasuries, down from $102.5 in August.
Don’t fear the Fed tightening cycle
It is well understood that the Fed begins a rate hiking cycle when current and forecasted economic conditions are robust and threatening to become too robust. It follows that credit conditions at the beginning of a tightening cycle are also 2 We are not recommending Charter Communications but solely using it as
generally strong, capital markets receptive and risk assets well bid—in short, it is a favorable environment for high yield. As EXHIBIT 4 illustrates, high yield spreads have remained relatively steady throughout previous rate hike cycles. Spreads don’t widen substantially until well after the end of the rate hike cycle, when credit conditions are tighter, capital markets less receptive and investors less consistently willing to bid for risk assets. As tighter credit conditions work their way through the economy, more levered, poorly positioned credits eventually succumb, spreads widen and a new default cycle begins.
When rates rise because of Fed tightening, high yield spreads should provide a cushion to partially absorb the impact of the rate move. This spread makes high yield somewhat insulated to rate hikes when compared with other fixed income asset classes. The cushion partly explains why high yield has a lower correlation to Treasuries relative to most other fixed income asset classes. Today high yield spreads are wider than they were at the start of the four previous tightening cycles, which means they already have a considerable cushion.
Fed funds rate Domestic HY spread to worst
0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000
Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15
HY spread to worst (bps)
Fed funds rate
0 2 4 6 8 10 12
Fed funds rate 0.25 Domestic HY stw 706bps
Spreads don’t widen substantially until well after the end of the rate hike cycle EXHIBIT 4: HISTORICAL SPREAD LEVELS AND FED FUNDS RATE
Source: J.P. Morgan Asset Management. The above information is shown for illustrative purposes only.
CONCLUSION: FUNDAMENTALS FIRST
AND FOREMOST
In any market environment, high yield has an important role to play in a disciplined, well-diversified asset allocation. In the current environment, as we consider opportunities in the high yield market we must acknowledge the wide range of exoge-nous events that can impact investor risk appetite. Emerging markets growth, U.S. politics, tensions in the Middle East and a wide range of geopolitical forces have an uncertain impact on global growth prospects. Certainly, they pose increased risk to all risk assets.
Looking specifically at the impact of the China slowdown and commodity weakness on global growth, we see increased risks to the high yield market. Nonetheless, we expect the majority of high yield issuers to maintain solid fundamentals with rea-sonable growth in revenues and cash flows (ex-energy and
Revenues y/y Ebitda y/y
-40 -30 -20 -10 0 10 20 30 40 50 60 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Percent 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 2Q 15 Multiple
Ebitda-CAPEX/interest expense Ebitda/interest expense
4.24.34.2 4.4 4.74.8 5.2 5.0 4.7 4.3 4.2 4.1 4.04.0 3.93.93.93.93.94.0 4.04.14.04.14.1 4.24.14.04.14.1 3.5x 3.7x 3.9x 4.1x 4.3x 4.5x 4.7x 4.9x 5.1x 5.3x 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 2Q 15 Multiple 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Percent -22 -38-41 -24 -13 26 14 52 21 11 29 -2 22 14 14 16 5 3 103 9 8 15 8 7 3 -60 -40 -20 0 20 40 60
High yield fundamentals are supportive
EXHIBIT 5A: REVENUES AND EBITDA HAVE FALLEN IN 2015 EXHIBIT 5B: LEVERAGE LEVELS REMAIN REASONABLE
EXHIBIT 5C: COVERAGE RATIOS REMAIN HEALTHY EXHIBIT 5D: COMPANIES HAVE REDUCED CAPEX SPENDING
Source: Standard & Poor’s Leveraged Commentary & Data, J.P. Morgan Securities LLC; data as of June 30, 2015.
commodity-related sectors) as shown in EXHIBIT 5. The vast majority of high yield issuers should benefit from the decline in commodity prices, either through higher demand from their customers or lower cost inputs. We observe, too, that recent global economic uncertainty and resulting volatility have dramati-cally increased dispersion by ratings bucket, sector and issuer. This presents a significant opportunity for active management. As we have noted, current spreads are now above their long-term averages while defaults are well below their long-long-term averages. Moreover, current spreads are significantly wider than they were during previous periods of similar default rates. These spreads assume a higher risk of recession in developed markets than we think is reasonable, and they imply much higher and broader default experience than we would anticipate. Yield and opportunity have returned to the high yield market.
Important Disclaimer
NOT FOR RETAIL DISTRIBUTION: This communication has been prepared exclusively for institutional/wholesale/professional clients and qualified investors only as defined by local laws and regulations.
The views contained herein are not to be taken as an advice or a recommendation to buy or sell any investment in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of writing, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own professional advisers, if any investment mentioned herein is believed to be suitable to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yield may not be a reliable guide to future performance.
It shall be the recipient’s sole responsibility to verify his / her eligibility and to comply with all requirements under applicable legal and regulatory regimes in receiving this communication and in making any investment. All case studies shown are for illustrative purposes only and should not be relied upon as advice or interpreted as a recommendation. Results shown are not meant to be representative of actual investment results.
J.P. Morgan Asset Management is the brand for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. This communication is issued by the following entities: in Brazil by Banco J.P. Morgan S.A. (Brazil); in the United Kingdom by JPMorgan Asset Management (UK) Limited; in other EU jurisdictions by JPMorgan Asset Management (Europe) S.à r.l.; in Switzerland by J.P. Morgan (Suisse) SA; in Hong Kong by JF Asset Management Limited, JPMorgan Funds (Asia) Limited or JPMorgan Asset Management Real Assets (Asia) Limited; in India by JPMorgan Asset Management India Private Limited; in Singapore by JPMorgan Asset Management (Singapore) Limited or JPMorgan Asset Management Real Assets (Singapore) Pte. Ltd; in Taiwan by JPMorgan Asset Management (Taiwan) Limited; in Japan by JPMorgan Asset Management (Japan) Limited which is a member of the Investment Trusts Association, Japan, the Japan Investment Advisers Association Type II Financial Instruments Firms Association and the Japan Securities Dealers Association and is regulated by the Financial Services Agency (registration number “Kanto Local Finance Bureau (Financial Instruments Firm) No. 330”); in Korea by JPMorgan Asset Management (Korea) Company Limited; in Australia to wholesale clients only as defined in section 761A and 761G of the Corporations Act 2001 (Cth) by JPMorgan Asset Management (Australia) Limited (ABN 55143832080) (AFSL 376919); in Canada by JPMorgan Asset Management (Canada) Inc.; and in the United States by JPMorgan Distribution Services Inc., member FINRA/SIPC.; and J.P. Morgan Investment Management Inc. EMEA Recipients: You should note that if you contact J.P. Morgan Asset Management by telephone those lines may be recorded and monitored for legal, security and training purposes. You should also take note that information and data from communications with you will be collected, stored and processed by J.P. Morgan Asset Management in accordance with the EMEA Privacy Policy which can be accessed through the following website http://www.jpmorgan.com/pages/privacy.
Brazilian recipients:
© 2015 JPMorgan Chase & Co. All rights reserved. 4d03c02a8002dd55 II_High yield credit
