From Moody’s:
Fewer Defaults Will Stave Off Much Wider Spreads
The high-yield bond market recently incurred a jarring sell-off. On October 24, the composite speculative-grade bond yield and its spread over Treasuries bottomed at 5.46% and 340 bp, respectively. By November 15, the spec-grade yield had jumped up to 6.13%, while the spread swelled to 407 bp. Nevertheless, the latest widening of high-yield bond spreads more likely stems from a correction of under-compensation for default risk rather than from a deterioration of corporate credit quality.
