The high yield market is in an odd position. On the one hand, there are clear and mounting signs of corporate distress bankruptcies and defaults are rising and many companies are feeling the pain of rising borrowing costs.
Yet it continues to go from strength to strength spreads over government bonds continue to narrow and money continues to flow into the sector. What explains this apparent discrepancy?
There are emerging signs of problems for highly indebted corporates. In the UK, government data showed company insolvencies in England and Wales rising 40% year on year, with 2,552 companies declared insolvent in May.
Eurostat reports that the number of bankruptcy declarations among EU businesses is running at its highest level since th…
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