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
https://englundmacro.blogspot.com/2023/10/junk-rated-firms-have-187-trillion-due.html
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