Continuing our conversation about dispersion within asset classes, a recent piece from the FT offers some great insights into high yield bonds across the US and Europe. According to the report, investors are now requiring greater yields to take on the debt of the most fragile junk-rated issuers. At the same time, the yield spread separating these highly vulnerable companies from their better-rated peers in the junk category is expanding. This trend is particularly pronounced in Europe, where the difference in expected yields between CCC-rated and BB-rated bonds has experienced a massive surge.

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