A $1 Trillion Junk Pile May Need 25% Yield to Be a Buy, UBS Says
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Even after the riskiest junk bonds plunged 9 percent this year, they’ll need to get much cheaper before investors feel comfortable stepping in to buy the $1 trillion of stressed or distressed credit in high yield, according to UBS AG.
Yields would need to rise to 20 percent to 25 percent to lure investors into even the lowest rungs of junk debt outside of the commodities sector, UBS Securities credit strategists led by Matthew Mish wrote in a note Thursday. The debt is currently yielding around 15 percent, according to data compiled by Bloomberg.