High Yield Paper & Packaging: 2026 Midyear Outlook: Check the Box and Reach for Yield

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High Yield Paper & Packaging: 2026 Midyear Outlook: Check the Box and Reach for Yield

J P M O R G A N North America Credit Research

01 July 2026

High Yield Paper & Packaging

2026 Midyear Outlook: Check the Box and Reach for

Yield

We have an Overweight recommendation on HY Paper & Packaging heading North America Corporate Credit -

into the second half of the year. The HY Paper/Packaging index trades, as of June Paper and Packaging (HY)

30, at 8.21%, ~100bp wide to the JPM HY index. YTD, the sector has returned Arjun Chandar AC

-0.70%, representing the worst performance of any sector in HY. In 2025, HY (1-212) 834-4047

Paper/Packaging was the worst performing sector in HY. We turned to Overweight arjun.c.chandar@jpmorgan.com

in June for the sector as a result of what we believed to be adequate collective J.P. Morgan Securities LLC

widening in the sector over the past 18 months in a supportive HY market. While

we acknowledge sectoral attributes that justify wider than average Index spreads

(20%+ CCC-concentration, high leverage, exposure to oil/gas as an input cost,

demand declines in certain verticals due to GLP-1 substitution effects), we believe

the sector has more than appropriately discounted for these risks. As the market

remains tight on a spread basis, we like reaching for yield in FCF positive

packaging names like OI and TRIVIU and remain constructive on leverage across

defensive end markets within packaging. We prefer levered HY Packaging to

levered HY Paper/Pulp as we expect paperboard and pulp prices to remain under

pressure in the second half of the year due to global oversupply concerns. We note

that prospects for a stronger USD in the second half of the year could put pressure

on the Packaging space, which tends to skew more multinational than most with