Distressed Already: Junk Bonds Issued in 2021 Plunge Amid Tumult

In hindsight, maybe it wasn’t a good idea to lend hundreds of millions of dollars at rock-bottom interest rates to a money-losing used-car seller, a payday lender, or a hospital chain in the middle of a pandemic.

But that’s what happened during 2021 amid insatiable demand for junk bond offerings, and now with the economic outlook dimming, some of those newly minted notes are trading like distressed debt.

More than 220 US dollar-denominated corporate bonds issued last year are trading with spreads greater than 1,000 basis points, according to Bloomberg data. That’s a more dismal showing than bonds ...