Brian Chappatta, Columnist

Investors Bet Against Junk Bonds at Their Peril

Despite signs of anxiety, a widespread collapse in high-yield debt is far from certain.

July 9, 2020 at 10:00 AM UTC

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

Be careful wagering against junk.
Photographer: Sebastien Bozon/AFP/Getty Images

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In the past six months, investors across the globe witnessed the world turn upside down. Then, just as suddenly, sweeping coordinated action by central banks and governments left many major financial markets unchanged at worst — and at record highs at best. Just from looking at asset prices, things appear mostly right-sided, even though millions are unemployed, bankruptcies are piling up and new coronavirus outbreaks raise doubts about reopening efforts.

After experiencing such a whipsaw, could you blame investors for heading into the second half of 2020 wanting to bet against something? Anything?