High-yield bonds

Bonds that yield an above-average interest coupon compared with the usual interest rates of investment-grade corporate bonds, government bonds or savings accounts are called high-interest bonds. In the current low-interest environment, this is of course relative, but usually it is 4% over inflation. The credit-quality segment includes every NON-investment-grade segment, meaning everything under a BBB- investment quality (BB+-CCC-). The issuers are either companies that because of their cyclical nature are subject to greater economic/sales fluctuations and risks or companies that are being developed further with private-equity shareholders and thus have a higher debt burden, or developing countries.

With regard to the latter, we as a sustainably acting company must also, in addition to the usual standard ESG criteria, ensure that such a company is not just being squeezed out, but that the debt burden and dividend policy are reasonable; politics also increasingly play a significant role in developing/emerging-market countries with regard to whether a country is, in our view, developing in a direction that is too totalitarian, meaning away from the people and toward the ruling powers.