Ed Altman Says Private Credit Has Broken a Junk Bond Barometer

The rise of private credit has had a surprising side effect: it’s made borrowing cheaper for companies in other high-yield markets, and has probably made a key barometer of credit risk less accurate, according to a professor who has spent decades studying junk and distressed debt.

The $1.6 trillion private credit market has brought a flood of capital to junk-rated companies, allowing them to borrow less in public markets than they might have otherwise. Since those corporations are selling less debt in public markets, junk bond valuations have surged, signaling there is little risk of delinquencies or defaults, according to ...