Economics
Fed-Induced Rally Makes Riskiest Debt Priciest: Credit Markets
This article is for subscribers only.
The lowest-rated junk bonds are the most expensive corporate debt following a Federal Reserve-induced rally in high-risk assets, adding to concern fixed-income securities are overvalued.
The extra yield investors demand to hold global bonds rated CCC or lower instead of government debt is about 10.1 percentage points, or 3.4 percentage points narrower than the average over the past 12 years, according to Bank of America Merrill Lynch index data. Debt with B ratings is the only other part of the market trading tighter than its historical average.