Credit conditions are helping fuel the record borrowing spree this year in the “junk” or high-yield bond market, according to BofA Global. But here’s a catch.
Credit conditions haven’t been this loose for U.S. companies in many years, helping fuel the roughly $500 billion record borrowing spree this year in the “junk” or high-yield bond market, according to BofA Global.
While Melentyev’s team sees “no shortage of concerns” like inflation, energy shortages and potential woes tied to China’s real-estate market that could rattle investors, it also said those risks are likely understood by junk-bond investors and priced into the market.Risks lurking under the radar would be a bigger worry, they said, with a central bank policy error topping their list of underpriced “managed” risks, or those stemming from a deliberate action by a government .
Fears around the omicron variant of the virus have been partly blamed for stoking market volatility in the past two weeks, with U.S. stocks ending Monday lower but the S&P 500 index SPX, -0.91% still less than 1% away from record territory.
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