US corporate bonds sold by low-rated companies have slumped in price, signalling lenders’ intensifying worries that scorching inflation and higher interest rates are beginning to hit borrowers most vulnerable to an economic downturn.
The slide in the price of U.S. corporate bonds sold by lower-rated companies shows lenders are increasingly concerned that scorching inflation and higher interest rates are starting to hit borrowers most vulnerable to an economic downturn.
Bonds assigned a triple C rating or below, the lowest rung on the ratings ladder, have posted a negative return of 2.8 per cent since the end of April, according to an Ice Data Services index. The performance starkly contrasts a 1.3 per cent gain for debt rated double B, the highest quality segment of the junk bond market.
Bonds rated C or below, the lowest rank on the rating ladder, have posted negative returns of 2.8% since the end of April, according to the Ice Data Services index. That performance contrasts sharply with the 1.3% yield on debt rated double-B, the highest-quality segment of the junk bond market.