Economics
UBS Says Junk Bond Bubble Just a Slowdown Away From Popping
- Default rates could reach record levels, strategists write
- `Clients were not being compensated for the credit risk'
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Investors that lend to U.S. junk-rated companies aren’t being compensated for the looming credit shakeout that could push defaults to record highs, according to UBS Group AG credit strategists Matthew Mish and Stephen Caprio.
"There is a bubble in speculative grade credit," Mish and Caprio wrote in an April 11 note. "Simply put, clients were not being compensated for the credit risk."