The case for global short-dated high yield | Insight Investment

Insight’s global short-dated high yield strategy targets issues which we believe will be repaid within a two-year time horizon. Ideally, the companies in which we invest are seeking to enhance their business in some way; this can take the form of selling an asset, buying a competitor, or undertaking capital investment such as building a factory or plant. This activity will lead to an increase in the amount of cash generated by the company, either via increased revenue streams or from the proceeds of a sale, which can be used by the company to repay its debt, or to refinance its debt on more attractive terms.

Once we have identified a potential target for investment, regular contact with management follows to ensure the plan is progressing as expected. We would normally identify four to five key stages over the two-year period which need to be met for us to be confident that we will be repaid on time. If it becomes clear that the plan is deviating from the expected timeline, we sell the issue. A sale in this situation is generally straightforward, as the original business plan is generally still in place, just delayed or not meeting our prudent timelines.