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Credit Insights

Investment-Grade Credit Spreads Grind Tighter, High-Yield Pauses

We also look at third-quarter reports for industrials.

Corporate credit spreads in the investment-grade market continued to push to new postcrisis lows last week, while credit spreads in the high-yield market paused as investors reassess this risky asset class. The average spread of the Morningstar Corporate Bond Index (our proxy for the investment-grade bond market) tightened 2 basis points to +97 last Thursday before backing off slightly to end the week at +98. Thursday's close marked the tightest the index has traded since before the 2008-09 credit crisis. For reference, the tightest the index has ever reached was +80 in February 2007. The BofA Merrill Lynch High Yield Master Index widened 2 basis points to end the week at +344. The tightest the index has registered since the credit crisis was +335 in June 2014, and the tightest the index has traded over the past 20 years was +241 in June 2007.