Q1 2020 – Annandale Capital Quarterly Commentary

The start of 2020 was marked by one of the sharpest market corrections in history. From their peak (2/19/20), global equity markets fell 33.9% in a matter of only 23 trading days. Investment grade and high-yield corporate bonds witnessed corrections similar in speed. LQD, an ETF tracking the investment grade corporate bond market fell 21.7% in only 9 trading days. The high yield market saw bond spreads (their incremental yield above Treasuries) climb from 3.4% to 11.0% in only 24 trading days. Within the levered loan market, the four worst trading days on record all occurred within a two week span this March. Although the magnitude of each of these movements is notable, the speed at which they occurred is what sets 2020 apart. The approximate cause of these knee-jerk movements is obvious, Novel Coronavirus or COVID19. Download Q1 2020 Commentary.