High yield’s fall from grace

high-yield market

Please note that market participants interviewed for this article commented before S&P’s downgrade of GM and Ford.

Spreads in the high-yield sector have widened since mid-March, in line with high grade, and are now back at 2004 levels. From tights of 270 basis points over mid-swaps, the high-yield index now stands at around 385bp over mid-swaps. In percentage terms, the recent widening is among the sharpest shifts ever seen in the market.

“The market gave up in the last

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