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High-Yield Bond Market

Observant1
edited January 29 in Other Investing
"Fifteen years ago, 41% of the high-yield bond market was rated BB—the rung just below
investment-grade bonds, which have a lower risk of default—or better.
A decade ago, those bonds were 49% of the market.
Today, the credit quality of the high-yield bond market has improved,
with roughly 59% of the market rated BB or better."

"But that doesn’t mean those low-quality issuers have gone away.
For starters, there are still plenty of bonds in the high-yield market with higher default risks.
That said, many low-quality issuers are raising money elsewhere—namely, the leveraged loan market
and the private credit market, where they can borrow money at more flexible terms."

https://www.morningstar.com/bonds/why-there-is-lot-less-junk-high-yield-bond-market

Comments

  • yogibearbullyogibearbull
    edited January 29
    Very interesting.

    HY bond market quality has improved (BB-rated have risen to 59% of total HY) because some of the bad credits have shifted to bank-loans (with floating-rates; BB-rated have declined to 30% of total bank-loans) & private-credit (mostly B-rated, 81% of private-credit).

    Market sizes in 2025 were HY $1.45 trillion, bank-loans $1.50 trillion, private-credits $1.57 trillion.
  • DrVenture
    Yes, it is interesting. As is what YBB added.
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