DISTRESS WATCH: Rally in Riskiest Debt Nears Another Milestone

The global market rally is pushing risk premiums on the lowest-rated corporate bonds to a level they’ve reached just a handful of times in the past 30 years.

Spreads on US dollar-denominated bonds rated in the Caa tier on the Moody’s Ratings scale are 20 basis points above 500 basis points, a level last reached in 2021, according to Bloomberg index data. Those spreads briefly dropped below 500 basis points in the second quarter of 2021 for the first time since 2007.

It’s yet another indication of how credit investors are embracing risk in the days following Donald Trump’s victory ...