US Junk Bond Market Defies Investor Expectations.
The US junk bond market has remained resilient despite concerns over higher interest rates and a potential economic downturn. The scarcity of supply due to meagre levels of new borrowing and a flurry of ratings upgrades supporting prices for existing debt have helped to keep yields low and spreads tight. However, some investors warn that the market could suffer a one-two punch further down the road as a downturn hits earnings just as issuers have to contend with higher interest rates.