Vanguard Says Junk Spreads Leave No Room for Negative Surprises

The widest junk risk premiums in about a month are too skimpy to compensate for the risk, according to The Vanguard Group Inc.

“Spreads are pretty tight, yields are about average — it’s not the best time to be investing in high-yield,” Michael Chang, the $11 trillion money manager’s head of high-yield corporate credit, said on the latest Bloomberg Intelligence Credit Edge podcast. “Where the market is today doesn’t leave a lot of room for negative surprises.”

The biggest hazard for high-yield isn’t a surge in debt defaults, according to Chang. He’s more worried about normalization in the ...