High-Grade Spreads to Blow Past 200 Basis Points If US Defaults

Corporate credit spreads are likely to widen dramatically if the US government fails to meet its debt obligations, warn credit strategists at UBS Group AG and JPMorgan Chase & Co.

The countdown clock is ticking louder as the so-called X-date — or the point at which the Treasury can no longer pay all the government’s obligations— draws nearer. Washington policymakers signaled Thursday evening they have made progress on a potential deal but the two sides have yet to reach an agreement less than a week before the Treasury is expected to run out of cash.

UBS strategists estimate ...