Junk Bond Issuance Collapses in the US and Europe

by Wolf Richter
Wolf Street

At a breath-taking pace. Default rate spikes. US stocks at record.

Standard and Poor’s default rate of US high-yield corporate bonds – the more appealing moniker for junk bonds – jumped to 4.5% in July, the worst since August 2010.

But no problem. The S&P Distressed High-Yield Corporate Bond Index – comprised of 470 bond issues so troubled that they’re trading at a yield that is at least 10 percentage points higher than the Treasury yield – has rallied 48% since February 12.

This includes the 2.5% swoon on Friday, when some of the hot air was let out.

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