Spreads on junk debt are compressed to levels seen during the wildest phases of pre-Lehman speculation

The BBB corporate debt index has dropped to a wafer-thin spread of 120 basis points. 

The fever has spread to risky “B”, a grade defined by Fitch as having a “material default risk and a limited margin of safety”.

So much for claims that we are now in a world of scarce capital.

“Euphoria is the name of the game,” said Barnaby Martin, credit strategist at Bank of America.

 “What are the classic signs of a credit bubble? When discipline goes out of the window and markets buy deteriorating credits because of a feeling of ‘value’.”

Ambrose Evans-Pritchard 1 March 2024


Junk-rated firms have $1.87 trillion due between 2024 and 2028

Bloomberg 12 October 2023



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