Bond market weakness will continue
Fitch Ratings this week issued a report on corporate credit markets. As you might expect, the findings were bleak. This graph shows the growth of corporate bonds that have earned Fitch’s lowest “CCC” rating, and the corresponding decline in bonds earnings the highest “AAA” rating.
The report concludes that high-yield bonds will continue to default at rates of 15 percent to 18 percent this year, and those rates will remain elevated next year. The writers foresee “dismal” recovery rates on loans and bonds. Consumer behavior was identified as a key to recovery in the bond market. Meanwhile, weak industry players will be further marginalilzed or dissappear altogether.
Don Mecoy
Business Writer
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[...] Recent news items have addressed the state of the bond market and the likelihood that defaults will remain high at the lower quality end of the spectrum for the foreseeable future. Since a bond really just represents loaned money riskier bonds are usually referred to as speculative. Speculation often ends up being expensive. [...]
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