CCC credit spreads have been on the rise. As of June 27, 2024, the ICE BofA CCC & Lower US High Yield Index Option-Adjusted Spread (OAS) stands at 9.44%. This spread represents the difference in yield between US dollar-denominated corporate debt rated CCC or below and the corresponding spot Treasury curve. The widening spread suggests increased risk perception for lower-rated corporate bonds.
Additionally, the spread is now significantly higher than the pre-COVID level as of December 31, 2019. This trend indicates that financial conditions may be tightening due to the Federal Reserve’s policy actions, including rate hikes and balance sheet reduction.
CCC Credit Spreads… they ain’t lying.$HYG pic.twitter.com/bjFarG7yDK
— PlungeProtectionTeam (@gamesblazer06) July 3, 2024