Coutts, the UK-based private bank, says that reports that it has been warning of a collapse of the high-yield debt market are inaccurate. In fact, the bank continues to hold high yield debt in portfolios and does not anticipate a sell-off in the current market.

Within fixed-income markets, the firm sees the best value in local currency emerging market bonds, where spreads versus dollar-denominated investment grade and high yield bonds remain near cyclical highs. Coutts also sees potential for emerging market currency appreciation to enhance returns in local currency emerging market debt.

“We are in a challenging fixed interest environment. While we do see overheating in selected areas of Asian high yield, particularly so-called “cocos” (contingent convertibles), and are avoiding these areas, our portfolios hold more robust high yield debt where valuations are not stretched,” Alan Higgins, chief investment officer UK at Coutts, said in a statement.