Leveraged Loans Are Outperforming Junk Bonds By Most Since 2023

US leveraged loans are on track to outperform junk bonds this month by the most in two and a half years, as some borrowers have shifted debt financing to loans while markets are roiled by conflict in the Middle East.

Leveraged loans through Thursday had a total return of 0.64% in March, according to a Morningstar LSTA index. That compares with a 1.49% loss for high-yield notes, a Bloomberg gauge shows. In September 2023, loans outperformed junk bonds by 2.145 percentage points, the measures show. Loans are also performing better year to date, with a 0.45% loss against declines of 0.81% for junk bonds.