Seeking Alpha

Junk bond default rate lowest since 2008

  • At 1.7% at the end of Q1, the U.S. junk bond default rate is off from 2.2% at the end of 2013, and at the lowest level since February 2008, according to Moody's. With the market yielding an average of just 5.2% (prior to 2012 it had never been below 6.5%), the default rate better stay low.
  • Moody's sees the default rate rising to 2.4% by year's end and 2.7% one year from now - both still well below the 20-year average of 4.5%.
  • It's not necessarily a booming economy, but instead welcoming debt markets which allow low-rated issuers to refinance at extended maturities and lower rates.
  • ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, BSJG, HYHG, BSJI, ANGL, HYLS, BSJH, UJB, XOVR, THHY, SHYG, QLTC, BSJK, HYZD, HYND, BSJJ
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