was a somewhat extraordinary year for the high yield market; what drove that performance?
Jessop: The high yield market certainly had exceptional returns in 2009. The broad high yield market was up over 58%, according to the BofA Merrill Lynch High Yield Master II Index, nearly 20% higher than the previous record set back in 1991. This performance was largely driven by many of the same forces that led most risk markets to rally last year. Coming out of the latter half of 2008, a period characterised by indiscriminate selling, asset prices were significantly depressed and liquidity had all but disappeared. However, with extraordinary fiscal and monetary support from governments around the world stabilising the financial sector, investor sentiment improved dramatically. The year began with spread levels suggesting that over half the high yield market could default over the next three years, and upwards of 20% could default in 2009 alone. Furthermore, recoveries for the first defaults of the year dipped below 20 cents on the dollar. However, as equity markets began to recover,
