The run up in high yield and credit was incredible. Actually most credit instruments have performed better than equity. If you look at the performance of high yield index and leveraged loans they have outperformed S&P as can be seen in the chart below:
Actually most credit indices have gotten to the same pricing level of September last year. For example, LCDX, a leveraged loan index I have used to price Senior Bank Loan is priced now around 94 cents on the dollar, a similar price to where it was trading before Sep 2008, while its level in December were 70 cents on the dollar. That is some appreciation.
I am afraid that there are still a lot of risks in the economy and corporate leverage to warrant a price level to pre September 2008 levels. Also recoveries are below norm due to the high leverage, which lessen the attractiveness. That's why I will take my money out of PHD, senior bank loans closed end fund, right now. I may be early to sell but I do not like how far and quick the run up in the price. Also a 50% capital appreciation plus dividends is not something to sneeze at.