Credit Market Turmoil: BofA says Non-IG Bonds Defaults will be >20%

www.morningstar.com/news/marketwatch/20200418118/wave-of-corporate-defaults-could-reach-more-than-20-despite-feds-foray-into-buying-junk-bonds-warn-analysts

Just to get in front of the “Fed will buy everything, so no problem, bro” sentiment…the analysts understand that. Also, as I continually say the Fed buying bonds means tighter spreads; it doesn’t mean the companies can pay even at tighter spreads.

If companies don’t have the revenue to service the debt, they default. And the Fed can spend $50trln to buy bonds, and it won’t push on the string.

 

AC