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Credit Insights

Corporate Bond Credit Spreads Continue to Widen

High-yield fund flows seesaw between inflows and outflows.

Credit spreads in the corporate bond market continued to widen last week. The average spread of the Morningstar Corporate Bond Index widened 4 basis points to +116, the widest spread it has registered this year and even with where it traded last summer. The average spread of the BofA Merrill Lynch High Yield Master Index widened 5 basis points to +349; however, while the average credit spread of the investment-grade index is back to its highs for the year, the widening in the high-yield sector has only returned to the average level that the index has registered this year. The S&P 500 rallied Friday following the employment report, but the gains only brought the equity market back to where it began the week.