US junk bond spread widens to more than 300 bps

BY Reuters | CORPORATE | 03/11/25 06:41 AM EDT

March 11 (Reuters) - The yield spread between junk-rated corporate bonds and U.S. Treasuries opened out late on Monday to its widest level since September, in a sign that overall investor confidence is deteriorating as worries about recession and a global trade war rise.

On the ICE BofA U.S. High Yield Index, a commonly used benchmark for the junk bond market, the option adjusted spread surged to 316 basis points, a level not seen since September 24. These spreads refer to the interest rate premium investors demand to hold low rated corporate debt over safer Treasuries. (Reporting by Alden Bentley; Editing by Andrew Heavens)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

fir_news_article