Riskiest US Junk Bond Spreads Vault Over 1,000 Basis Points
- Borrowing costs have jumped in the wake of SVB’s failure
- Premiums that wide are typically associated with distress
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Risk premiums in the US junk bond market’s riskiest slice soared past 1,000 basis points on Monday as the collapse of Silicon Valley Bank sent corporate funding costs higher and kept borrowers on the sidelines.
The average spread over Treasuries for bonds in the Bloomberg Barclays Caa US High Yield Index widened 64 basis points to 1,003 basis points, the highest since Dec. 30, and a level that’s typically associated with distress.