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Video: 2019 outlook for floating-rate loans

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The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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      By Craig P. Russ, Co-Director of Floating-Rate Loans, Eaton Vance Management

      Boston - Floating-rate loans as measured by the S&P/LSTA Leveraged Loan Index posted a positive total return in 2018, so they provided a bit of a shelter from the storm in markets.

      In 2019, we think the floating-rate nature of the asset class will be advantaged in a rising interest-rate environment, which is largely expected for 2019. Also, loans are non-investment-grade credit, but they are senior in the capital structure, which may provide lower risk relative to other credits such as high-yield bonds.

      (Tap or click the image below to view the video.)

      Blog Image Russ 19 Outlook Jan 9

      Recently, there have been several negative media articles focusing on the increasing risk in floating-rate loans. We think that this narrative in the media is a bit overdone, and I explain why in the video above.