2H 2025 HY Healthcare Outlook

US dollar high yield health-care bonds and loans face heightened event risk in an increasingly uncertain operating environment, as more leveraged issuers navigate a complex, evolving regulatory regime amid slowing M&A and fewer strategic take-outs. A slowing of government spending through reimbursement cuts and regulatory changes will likely weigh on earnings and cash flow, facing growth headwinds, and perhaps suggesting a trend toward negative ratings momentum the sector. Against this backdrop, credit selection remains key, with a focus on sufficient liquidity and sturdy fundamentals.