Talk of a bubble in junk bonds may be premature. Granted, average yields in the junk market recently slipped below the pivotal 7% mark, while global issuance is hitting record levels, but cash remains high on corporate balance sheets and defaults remain low. Bespoke examined the bubble fears and found that, historically speaking, high-yield is trading within a normal spread from comparable Treasury yields. A blowout in the spread would indicate a bubble, but that's not happening. In fact, government debt, with its surging yields, might be closer to bubble territory than junk bonds.
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