Tighter Spreads Disguise Wider Opportunities

2 minute read

As an asset class, high yield corporate debt looks expensive. Whether its Ba or Caa-rated, junk bond spreads have compressed inside long-term averages. For some, these spreads are taken as a sign that the high yield market is fully valued, and devoid of investment opportunities. But despite the steady, low volatility, and persistent drive towards tighter credit spreads and lower yields, there is meaningful turbulence beneath the surface.