July 21, 2024

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Where to find value in unrated credit markets

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The next five years hold immense potential for investing in stressed and distressed credits

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By Parul Garg

High-yield credit spreads this quarter hit a decade-low of 3.05 per cent, reflecting reduced demand for compensation against credit risk, indicating the market’s confidence in low credit risk ahead, but this optimism leaves little room for margins of safety.

Credit spreads serve as a premium offered to investors to offset the risks associated with bankruptcy, and despite robust economic indicators and persistent inflation concerns, the broader market fails to adequately compensate for such risks, offering limited opportunities for risk-adjusted returns.

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Special to Financial Post

2024-06-23 09:00:13

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