Investors shun riskier junk bonds as bankruptcy filings jump

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Financial Times 5d ago

Investors shun riskier junk bonds as bankruptcy filings jump - Financial Times

Quick Summary:

Analysts and investors said higher-grade borrowers typically had more flexibility to handle interest rates at their current 23-year highs, while lower-quality names were more vulnerable.

The move highlights how traders are growing increasingly concerned about weaker companies potentially losing access to funding and defaulting on their debt as borrowing costs stay high, and are instead opting to buy the debt of stronger companies for the yields on offer.

The possibility of a second Trump presidency means investors are anticipating “even more pressure on the government balance sheet, more fiscal stimulus”, said PGIM’s Barnhurst.“Those things are presumed by the market to be some degree inflationary, which only adds to the notion of higher for longer.