With CCCs Yielding 14%, XCCC May Be a Good Bet

Among the risky bonds out there, Triple-C-rated corporate bonds, aka CCCs, are among the riskiest. But on the flip side of that coin, in terms of yields, they’re also potentially among the most rewarding.

CCC-rated bonds are currently yielding around 14%. So, some investors may feel that these bonds are worth the extra risk. This is especially true if they think the warnings of a recession hitting the economy in 2024 have been overblown. In fact, JoAnne Bianco, a partner at the fixed income investment firm BondBloxx Investment Management, expressed this sentiment on a VettaFi-hosted webcast.

“The likelihood of a deep recession in the U.S. has decreased,” she said.

So, for investors comfortable with a little extra risk for some major possible rewards, the BondBloxx CCC-Rated USD High Yield Corporate Bond ETF (XCCC) may be a good fit.

See more: “US High Yield Posts 9% Returns

Capture Attractive Income Generation Potential With XCCC

XCCC seeks to capture attractive income generation potential, which provides cushion for widening spreads and higher expected defaults. The fund invests in high yield bonds that are rated CCC1 through CCC3. It seeks to track the investment results of the ICE CCC US Cash Pay High Yield Constrained Index.

XCCC, one of three ratings-specific high yield bond ETFs that BondBloxx offers, caps issuer exposure at 2%. It charges 40 basis points.

BondBloxx was launched in October 2021 to provide precision fixed income ETFs. They now offer 20 ETFs (soon to be 21) that span U.S. Treasuries, high yield bonds, and emerging market debt. BondBloxx exceeded $2 billion in assets under management in early August.

VettaFi’s Head of Research Todd Rosenbluth called BondBloxx “one of the more innovative providers of fixed income ETFs.”

“BondBloxx brought innovation to the high yield bond ETF space with its initial suite of products,” Rosenbluth said. He noted that its ETFs range from “risk-off government bonds” to “credit-quality-focused high yield ETFs for those willing to take on additional risk for higher rewards.”

For more news, information, and analysis, visit the Institutional Income Strategies Channel.