High-yield bond market may hold less junk than before

Many companies at the lower end of the credit rating spectrum are opting to raise finance in private markets rather than the more traditional route of issuance via public markets. — Reuters

THE US high-yield bond market is the dog that has rarely barked, never mind bitten, during the Federal Reserve’s (Fed) most aggressive interest rate-raising campaign in 40 years.

The economy’s resilience to that monetary tightening, and cooling inflation, are the obvious explanations why spreads have remained well behaved. The junk bond market may also contain less junk than before.