Blue-Chip Spreads Rally as Investors Bet Fed is Done Hiking
- Blue-chip spreads tighten to the lowest since February 2022
- The average corporate yield-to-worst has also been falling
The extended rally translates into lower funding costs for blue-chip borrowers looking to tap the primary market.
Photographer: Michael Nagle/BloombergThis article is for subscribers only.
Risk premiums on US investment-grade corporate bonds have narrowed to the tightest level in nearly two years on expectations that the Federal Reserve has reached the peak of its monetary-tightening cycle.
The figure, which measures the extra yield investors demand to own corporate bonds instead of US Treasuries, is at the lowest level since February 2022, according to data compiled by Bloomberg. High-grade spreads stood at 107 basis points on Wednesday, having fallen two basis points from the prior session, Bloomberg index data shows.