Credit Insights

Corporate Bond Credit Spreads Continue to Widen

Dave Sekera, CFA

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.