, Columnist
The $793 Billion Credit Market Recovery Is on Shaky Ground
Corporate bond yields have recovered their poise of late, but there’s still plenty that could go wrong as the world starts to emerge from lockdown
What if there’s a second wave.
Photo: Bloomberg
This article is for subscribers only.
Does the global central bank response to the Covid-19 crisis mean it’s safe for corporate-bond investors to go back into the water, or is the market just experiencing a temporary sugar rush?
The blowout in credit spreads (the difference between yields on bonds and those of their benchmarks) has abated. Almost half of the widening from the early days of the coronavirus lockdowns has been reversed, and the spread is steadily tightening. Investor optimism is returning, except in heavily affected industries such as carmaking and aviation.