A record portion of the investment-grade bond market sits just one step above junk status, and any economic turbulence could create big problems.
A record portion of the investment-grade bond market is sitting just one step above junk status.
Experts at the recent Milken Institute Global Conference broke down their fears around the situation, which are hitting a fever pitch.If you see a major corporate acquisition in the headlines today, there's a good chance it was financed by debt. But this seemingly unlimited spigot of capital has led to some potentially negative consequences. And the chorus of experts across Wall Street stressing caution has grown ever-louder.section of the corporate bond market. While the debt held by those firms is considered relatively safe and at low risk of default, the group's overall quality has declined over time.
The potential fallout could be swift and punishing. Bonds clinging to their investment-grade status could see their ratings downgraded into junk territory. That, in turn, would make it harder for them to pay back their loans, and possibly even default. Once that happens, bankruptcy might not be too far off..
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