Volkswagen Emissions Scandal Takes Toll on Corporate Bond Market
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Volkswagen AG’s escalating scandal over emissions-test cheating is beginning to ripple across the $10 trillion global corporate bond market.
Investors in the U.S. were demanding yields of as much as 4.6 percent to own the German automaker’s dollar-denominated debt on Tuesday. That’s more in line with companies with ratings closest to junk than the A grade that Volkswagen has from Standard & Poor’s. Credit-default swaps traders drove up the cost to protect against losses on debt across the auto industry as they braced for the potential of a widening probe.