Credit Spreads not a a Market Timebomb.

 

Corporate credit spreads are tight, but aren’t about to blow up.

Corporate debt had a particularly beneficial pandemic in the US as the Federal Reserve cut rates close to zero for a two-year period 

along with providing additional monetary stimulus through its quantitative easing bond-buying program. 

Firms drank long and deep at the well of super-cheap yields, not only raising plenty of debt but also extending the maturity profile of their borrowing. 

Societe Generale SA strategist Albert Edwards points to the unusual situation of companies and banks being able to invest plentiful balance sheet liquidity at higher Treasury yields than their own financing costs. 

This window won’t last forever — but it sure has helped creditworthiness in recent years.

The riskiest form of financial debt, Additional Tier one bonds also know as CoCos, are at their tightest average risk premium on record. 

As Bloomberg's Tasos Vossos wrote in his Credit Weekly: "Everything's expensive. There's nowhere to hide."

Marcus Ashworth Bloomberg 13 August 2025 https://www.bloomberg.com/opinion/articles/2025-08-13/credit-spreads-aren-t-hiding-a-market-timebomb


What is a CoCo bond?

https://englundmacro.blogspot.com/2023/03/what-is-coco-bond.html



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