In Other News: Credit Spreads Are Blowing Up

From ZeroHedge, Nov. 19:

For years, it appeared that aught could milk shiver the relentless bid for United States of America of America corporate credit, whether inwards the investment flat infinite or inwards junk bonds. In fact, just over a calendar month ago, on Oct 2, we reported that high yield spread printed the tightest levels seen since the financial crisis.

Influenza A virus subtype H5N1 lot has changed since then.

As discussed before after ignoring the motion inwards stocks, credit spreads accept been rocked sharply wider due to a confluence of negative factors ranging from the plunge inwards stocks together with spike inwards the VIX, escalating merchandise country of war concerns, fears virtually rising rates together with deteriorating fundamentals, worries virtually the halt of the United States of America of America financial stimulus, Brexit together with Italy’s budget's woes, together with final but non least, the recent collapse inwards GE together with PG&E bonds.

In fact, junk bond spreads blew out past times the most inwards almost 2 years final week, leaving the lowest-quality U.S. companies paying the most for their debt since mid-2016 according to Bloomberg. The yield on the Bloomberg Barclays United States of America of America Corporate High Yield Total Return Index has risen past times over 100 Earth points since Oct. one to almost 7.2%, the highest since June 2016. The spread on the index widened past times 51 bps, its biggest weekly arrive at since Feb 2016.

As the nautical chart below from Goldman shows, last calendar week credit had its worst provide since the crude oil cost troughed inwards early on 2016.

The repricing was most acuate for CCC-rated debt, which afterward outperforming the residue of the high yield market, saw a sharp, 200 Earth indicate boundary inwards the average yield to virtually 10.8%...

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