Credit Market Moves Toward Breaking Point as Investors Flee, Sales Flop
- Buyout debt pulled, high-grade funds lose cash, losses pile up
- BofA sees debt market slide into ‘borderline critical zone’
A customer counts 100 U.S. dollar banknotes.
Photographer: Kerem Uzel/BloombergThis article is for subscribers only.
Credit markets are starting to buckle under pressure from soaring yields and fund outflows, leaving strategists fearing a rupture as the economy slows.
Banks this week had to pull a $4 billion leveraged buyout financing, while investors pushed back on a risky bankruptcy exit deal and buyers of repacked loans went on strike. But the pain was not confined to junk -- investment-grade debt funds saw one of the biggest cash withdrawals ever and spreads flared to the widest since 2020, following the worst third quarter returns since 2008.