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Högrisklån till företag utan kreditbetyg har blivit en nordisk exportvara. Det konstaterar DNB Carnegies vd Alexander Opstad. Utvecklingen är explosionsartad.  Bara i september gavs det ut det som ofta benämns som junk bonds för cirka 50 miljarder kronor, ett nytt rekord. Den nordiska high yield-marknaden är värd ungefär 675 miljarder kronor, enligt Alfred Bergs vd Helge Arnesen. En annan orsak till Nordens popularitet är att här även ges ut mindre lån, medan företag i Europa bör låna minst 500 miljoner euro. Anna Ekelund DI 17 oktober 2025 https://www.di.se/nyheter/kraftig-okning-av-hogrisklan-i-norden/ Jamie Dimon and Jeff Gundlach have cautioned that valuations on credit are stretched, with Dimon saying credit spreads are "a little unnaturally low". Bloomberg 19 July 2025 https://englundmacro.blogspot.com/2025/07/junk-bond-investors-pile-into-riskiest.html

  How could that be, at a time when the Federal Reserve is concerned  enough about the economy to be cutting interest rates?  Corporate balance sheets remain solid, giving investors confidence that they can grab extra yield without taking exorbitant risk. The lack of credit creation is evident in the small increase in overall nonfinancial business debt tracked by the Fed Sam Goldfarb WSJ Oct. 5, 2025 https://www.wsj.com/finance/investing/why-corporate-bonds-are-on-a-tear-8e33ae2b Junk-bond investors are giving zero odds to a global trade war - F ebruary 2025 https://englundmacro.blogspot.com/2025/02/junk-bond-investors-are-giving-zero.html

Mention 2007 to a group of professional investors, and watch them bristle (reagera med ilska, ovilja eller irritation, ofta synligt genom kroppsspråk).  The year was a bad one. It marked the end of the great moderation—a long period of low inflation and steady economic growth that began in the 1980s—and the start of strains in credit markets which became the global financial crisis. You would not be the only one bringing up the year, though. Gloomier investors now sense pre-crisis complacency in credit markets.  Over the past month, the spread between yields on corporate bonds and Treasuries has fallen to its lowest since 2007.  Junk bonds offer spreads of just 2.8 percentage points, far below the 4.5-point average of the past two decades.  The market is priced for perfection; investors think the risk of disorder is just about as low as it has ever been. Just how risky is corporate lending? A boom in alternative markets has made it difficult to answer that question....

Serious credit-card and auto-loan delinquencies have climbed to 2008-09 recession levels.  The housing market shows cracks while the labor market is weakening. You wouldn’t know it from the buoyant stock market and consumer spending. Sweden’s Klarna, a popular buy-now-pay-later service, last week announced the launch of an initial public offering, which is expected to be one of the biggest this year.  Margin borrowing has surged this year amid market exuberance and anticipation of more easing by the Fed.  Meanwhile, companies are raising capital by piling on debt. Issuance of junk-rated debt hit a record this summer as investors demand less of a premium to buy risky debt.  Spreads between high-yield bonds and Treasurys have shrunk to levels seen during the dot-com and housing bubbles. Allysia Finley Wall Street Journal Sept. 7, 2025 https://www.wsj.com/opinion/americas-buy-now-pay-later-economy-3dae0902 The current junk spread, at 2.73%, is not just in the lowest qui...

  Jamie Dimon Photographer: Al Drago/Bloomberg Jamie Dimon and Jeff Gundlach have cautioned that valuations on credit are stretched, with Dimon saying credit spreads are "a little unnaturally low". Bloomberg 19 July 2025 https://www.bloomberg.com/news/articles/2025-07-19/junk-bond-investors-pile-into-the-riskiest-debt-credit-weekly I don’t want to be a tone deaf CEO; while the company is doing fine, it is absolutely obvious that a big chunk of [people] have been left behind  — 40% of Americans make less than $15 an hour:  40% of Americans can’t afford a $400 bill, whether it’s medical or fixing their car  15% of Americans make minimum wages.  70,000 die from opioids. Jamie Dimon, chairman and CEO of JPMorgan Chase https://englundmacro.blogspot.com/2019/03/jamie-dimon-chairman-and-ceo-of.html “Dad, what’s a financial crisis?” One of Jamie Dimon’s daughters called him up from school with a question more than a decade ago: “Dad, what’s a financial crisis?”  Th...

  They are almost certainly wrong, since even if a trade war is avoided, the odds are not zero. The current junk spread, at 2.73%, is not just in the lowest quintile — it is lower than 97% of all monthly readings since 1997. Mark Hulbert MarketWatch 5 February 2025 https://www.marketwatch.com/story/pay-attention-to-what-junk-bonds-are-saying-about-the-value-of-treasury-bonds-824408f8 Spreads on junk debt are compressed to levels seen during the wildest phases of pre-Lehman speculation https://englundmacro.blogspot.com/2024/04/spreads-on-junk-debt-are-compressed-to.html

  The extra yield that investors demand to hold speculative-grade corporate bonds over U.S. Treasurys fell to 2.85 percentage points last week, just a touch higher than the 14-year lows reached in 2021 It is a sign investors have few concerns that the economy is on the verge of a slowdown that would spark bankruptcies and defaults among lower-rated companies. Wall Street Journal 21 October 2024 https://www.wsj.com/finance/investing/red-hot-bond-market-powers-wave-of-risky-borrowing-57886b52

  Risky Bonds Join the Everything Rally Premium paid by high-yield debt falls to near pandemic-era lows Vicky Ge Huang Wall Street Journal 22 May 2024 https://www.wsj.com/finance/investing/risky-bonds-join-the-everything-rally-3ca8b318

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 https://www.telegraph.co.uk/business/2024/03/01/central-banks-fight-recession-credit-bubble-same-time/ 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

Fifty years ago, banks and their loan officers still did most of the work. They’d use quantitative yardsticks, but the terms would come down to a banker’s discretion and a negotiation with the borrower. Now banks have largely been disintermediated in favor of credit markets.  Markets have clear advantages over banks. In the long run, the wisdom of crowds ensures they incorporate more points of view and arrive at a better price. And trading credit in securities markets avoids the inherent weakness of all fractional reserve banking: that a loss of confidence can render the institution insolvent. In a market, if confidence is lost in a credit, then buyers have an opportunity to snap up bargains. The risk of a systemic crisis is much reduced.  But even strong believers in free markets are worried that the new system is distorting judgments and misdirecting credit. Amar Bhide, an economist at Tufts University near Boston, argues that Friedrich Hayek, the great libertarian philosoph...

 Moody’s Sees Trouble for Over $1 Trillion of Maturing Junk Debt Companies rated B2 and below — that is, five or more notches deep into junk territory — will have to deal with $206 billion of debt coming due in 2024 and 2025 “Companies rated Caa and lower will likely find it difficult to refinance maturities at an interest rate they can afford,” the analysts noted. Bloomberg 12 October 2023 https://www.bloomberg.com/news/articles/2023-10-12/moody-s-sees-trouble-for-over-1-trillion-of-maturing-junk-debt Junk https://englundmacro.blogspot.com/search/label/junk Home https://englundmacro.blogspot.com/ https://internetional.se/ https://twitter.com/RolfEnglund1

that borrowed in a world of 3-4% in interests with maturities in 2025 and 2026, said Eric Larsson, co-head of special situations at Alcentra, a credit-focused fund.  “When they come to refinance, you’ll see a coupon step-up from 3%-4% to maybe 9%. That’s simply not viable for most capital structures.” Brink Newsletter Bloomberg 29 September 2023 https://www.bloomberg.com/news/newsletters/2023-09-29/junk-rated-companies-are-facing-a-wall-of-debt-maturities Home https://englundmacro.blogspot.com/ https://internetional.se/ https://twitter.com/RolfEnglund1

 While high-yield bond maturities still look manageable for the next 12 months, the wall of expiring debt looks much more daunting in 2024.  Companies will have to start refinancing well in advance of that, and they’re likely to find that the cost has risen too high for otherwise flimsy business models to withstand.  At today’s rates, all-in yields on high-yield debt sit around 8.67% at the time of writing, far above the 2017-2021 average, according to Bloomberg data. Credit spreads for junk bonds typically head toward 800 basis points over Treasury bonds in a typical recession, and at the current 452, they’re nowhere near discounting a genuine downturn.  Jonathan Levin Bloomberg 27 december 2022 https://www.bloomberg.com/opinion/articles/2022-12-27/the-junk-bond-reckoning-is-coming-in-2023 US junk bond sell-off resumes FT 3 August 2022 https://englundmacro.blogspot.com/2022/09/us-junk-bond-sell-off-resumes.html