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Junk Debt Is Poised for Worst Month Since the Early Days of the Pandemic

  • ‘Real pain’ ahead if spreads widen, says Thornburg’s Hoffmann
  • BB bonds, which have most duration, vulnerable as yields surge


Source: Getty Images

Rapidly rising yields have dragged junk bonds down by the most since the pandemic started, led by the highest-rated bonds, which face record losses. 

The Bloomberg U.S. Corporate High Yield Bond Index is down 1.23% year-to-date, headed for its biggest monthly tumble since March 2020 and worst January performance in six years. About half that index is rated BB -- the rating tier with most duration, or sensitivity to rising rates -- and those bonds have fallen by 1.7%.