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Credit-Market Cracks Emerge as Delta Strain Sows Reopening Angst

  • Riskier debt stumbles on virus fears as equities extend rally
  • Troubled bond, loan pile grows as high-yield spreads widen
A Day in the Life of Wall Street as New York’s Return Begins
Photographer: Amir Hamja/Bloomberg
Updated on

Strong corporate earnings have sent stocks on something of a tear in recent weeks. But credit markets are painting a more nuanced picture amid growing concerns of a coronavirus resurgence.

Less than a month removed from the tightest spreads of the post-financial crisis era, risk premiums for speculative-grade debt are climbing once again. Bonds of companies hurt most by shutdowns have sold off, including American Airlines Group Inc. and Staples Inc. The amount of distressed debt has even started to creep up, though defaults remain far below levels seen earlier in the pandemic.