DISTRESS WATCH: Market Turmoil Threatens to Crash Credit Party

The benign financial conditions that helped shrink the world’s global distressed debt pile to its lowest level of the year have started to crumble.

The risk premium on junk-rated corporate bonds in a global Bloomberg index jumped 58 basis points in the past three trading sessions, the worst selloff since Silicon Valley Bank collapsed in March 2023. A Bloomberg US Financial Conditions index, meanwhile, has fallen to the lowest level since November.

Before the selloff, both measures had been hovering at or near their most bullish levels on record, giving even some of the most highly leveraged companies ...