Credit spreads for quality junk bonds remain tight, but CCC-rated bonds have crashed. US Triple-C bonds yield 18 per cent, while European Triple-C yields exceed 21 per cent, with private loans nearing 36 per cent yield. Distress is evident across markets, particularly in Europe, where illiquidity compounds credit weakness.
The average broadly syndicated loan refinanced in 2023-24 was rated B3—just above CCC—suggesting pain is spreading to private credit. Distressed loans trade below 80 cents on the dollar, with trouble 'everywhere' in leveraged loan markets. While Triple-C bonds are idiosyncratic, their behavior offers insight into broader credit stress affecting both public and private markets.
Source: Financial Times Markets · Summarized by HeadlinesBriefing