Fridson sees surge in high-yield defaults

|By:, SA News Editor

Beginning in 2016, Fridson sees the high-yield default rate averaging 8.4% over the following four years - this compares to the long-run average of 4.5% and the current rate of just 2.5%. Putting those numbers in perspective, it means the number of issuers defaulting will be triple that during the 2008-09 crisis, and double the number defaulting in the 5-year surge beginning in 1999.

For those who have bid up junk bond prices to an average of 103.2 cents on the dollar, the average yield down to 5.8%, and remain focused on interest rate risk instead of credit risk ... you've been warned.

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