Marty Fridson Says Junk Bonds Don’t Pay Enough for the Risk

This month’s rally crushed corporate debt yields to a level that does not adequately cover the risk, warns junk bond guru Marty Fridson.

“High-yield bond valuations are severely out of whack with the yield premium that would fairly compensate” investors, wrote Fridson, whose debt analysis has been studied by Wall Street for decades, in a report Tuesday.

Credit markets have erased last month’s losses, leaving the spread on the US high-yield bond index at about 300 basis points, from above 450 basis points after aggressive US tariffs were unveiled in early April. The rally that followed a trade truce ...