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RidgeWorth Seix Floating Rate High Income Fund – 2nd Quarter 2016

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Episode Transcript

RidgeWorth: Welcome to RidgeWorth Investments Fund Podcast Series. It's Monday, July 11th, and we're speaking with George Goudelias of Seix Investment Advisors, subadviser to the RidgeWorth Seix Floating Rate High Income Fund. George, can you share some highlights from the leveraged loan market during the second quarter?

Goudelias: Overall, I'd call it another solid month for the asset class, picking up from the momentum from the back half of the first quarter. Loans continued to perform well during the quarter with April and May being the stronger months. June was more of an unchanged month, but for the quarter, the market was up almost 3% and now over 4% for the year.

RidgeWorth: What type of an impact is Brexit having on the leveraged loan market?

Goudelias: The initial impact was confusion, higher volatility, and with that came lower pricing which was one of the reasons why the aforementioned weaker June occurred. I would say that after having some time to digest the news, the impact has been more muted. We have seen a little bit of an impact on the few companies out there that have specific exposure to the UK [United Kingdom], namely some European companies and some UK companies with a lot of business in the UK, but in many cases the liabilities they have are also denominated in sterling, so again, the impact was relatively muted. The majority of the leveraged loan asset class is very much U.S.-focused, your typical broadcaster cable company, hospital company don't really have international exposure, so overall I would say it's been a very minimal impact.

RidgeWorth: How are the rebounding commodity markets influencing the leveraged loan market?

Goudelias: They certainly helped to bring the markets back from the big sell-off that we saw in the fourth quarter of last year, so for the Energy exploration companies, the midstream companies, in addition to Metals & Mining, in particular iron ore, we've seen very nice rebounds, so those two sectors continue to be the top performers in 2016.

RidgeWorth: Do you expect the relatively light pace of issuance to continue into the second half of the year?

Goudelias: I think for the third quarter, I think it will be relatively light. We could see a little more issuance towards the back half of the year, but right now we continue to see fewer LBOs [leveraged buy outs], less M&A [mergers & acquisitions] and quite frankly less need for imminent refinancing needs as corporate America has done a pretty good job of extending maturities over the last couple of years into the back half of this decade, into the next decade. I think companies will continue to be opportunistic, so when the capital markets feel good, they'll continue to push maturities that might be 2018, 2019, into 2020 and beyond, but I would say for the very short term, I would expect relatively light issuance and then picking up most likely after Labor Day.

RidgeWorth: What sectors or areas are looking attractive to you as we head into the third quarter?

Goudelias: Right now, we’re seeing some relative attractiveness in the Healthcare space, Aerospace and Defense also have some select names that I would say look attractive. The Cable sector continues to look good, and then we're seeing a little bit of good relative value as well in several Energy names, in particular the mainstream companies.

RidgeWorth: Thanks so much for your time today, George.

Goudelias: Thank you very much.

DISCLOSURES: A leveraged buyout (LBO) is the acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. All investments involve risk. Comments and general market related projections are based on information available at the time, are for informational purposes only, are not intended as individual or specific advice, may not represent the opinions of the entire firm and may not be relied upon for individual investing purposes. Information provided is general and educational in nature, provided as general guidance on the subject covered and is not intended to be authoritative. All information contained herein is believed to be correct but accuracy cannot be guaranteed. This information may coincide or conflict with activities of the portfolio managers. It is not intended to be and should not be construed as investment, legal, estate planning or tax advice. RidgeWorth does not provide legal, estate planning or tax advice. Bonds offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher quality bonds generally offer less risk than longer term bonds and a lower rate of return. Generally, a fund’s fixed income securities will decrease in value if interest rates rise and vice versa. Although a fund's yield may be higher than that of fixed income funds that purchase higher rated securities, the potentially higher yield is a function of the greater risk of that fund’s underlying securities. Floating rate loans are typically senior and secured, in contrast to other below-investment grade securities. However, there is no guarantee that the value of the collateral will not decline, causing a loan to be substantially unsecured. Loans generally are subject to restrictions on resale. Certain types of loans may limit the ability of a fund to enforce its rights and may involve assuming additional credit risks. Past performance is not indicative of future results. For performance data current to the most recent month end visit our website at www.ridgeworth.com. Before investing, investors should carefully read the prospectus or summary prospectus and consider the fund’s investment objectives, risks, charges and expenses. Please call 888.784.3863 or visit ridgeworth.com to obtain a prospectus or summary prospectus, which contains this and other information about the funds. ©2016 RidgeWorth Investments. All rights reserved. RidgeWorth Investments is the trade name for RidgeWorth Capital Management LLC, an investment adviser registered with the SEC and the adviser to the RidgeWorth Funds. RidgeWorth Funds are distributed by RidgeWorth Distributors LLC, which is not affiliated with the adviser. All third party marks are the property of their respective owners. Seix Investment Advisors LLC is a registered investment adviser with the SEC and a member of the RidgeWorth Capital Management LLC network of investment firms.

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