Global investors now demand about 6.4 percentage points extra yield to hold CCC‑rated junk over near‑investment‑grade notes, the widest premium in 14 months, Bloomberg data show. The surge reflects swelling anxiety over borrowers that piled up cheap debt during the ultra‑low‑rate era. Credit funds brace for stress in the riskiest loan segments and private credit.

Higher oil prices and the prolonged closure of the Strait of Hormuz have pushed inflation higher, tightening monetary policy and squeezing growth. Those dynamics hit companies that lack the balance sheets of stronger peers, especially those funded by the $2 trillion leveraged‑buyout boom. CCC spreads widened by 86 basis points, creating a five‑fold gap with BB debt, the widest divergence since the global financial crisis.

Market participants warn that a stagflation shift could trigger a default wave tied to the 2021‑22 buyout surge. Holly Kim of Glendon Capital said a default cycle is inevitable, while Pimco’s David Forgash described the high‑yield market as “bifurcated” and complacent. Investors therefore should steer clear of heavily leveraged consumer firms, as the risk of defaults now outweighs the lure of 7% yields.