Taper Defied With Bond Spreads Least Since ’07: Credit Markets
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Corporate-bond buyers are accepting the lowest relative yields since before the 2008 financial crisis to own dollar-denominated notes that face declining returns as the Federal Reserve considers paring record stimulus.
The extra yield investors demand to own debt of the most-creditworthy to riskiest borrowers instead of similar-maturity Treasuries has narrowed 31 basis points this year to 200 basis points, the lowest since October 2007, according to Bank of America Merrill Lynch index data. UBS AG sees losses for investment-grade debt next year even as spreads continue to contract.