The yield gap between junk-rated company bonds and investment-grade debt in emerging markets is near the smallest since June 2008 as less creditworthy borrowers benefit most from cash pouring into developing countries.
The spread has narrowed to 225 basis points, or 2.25 percentage points, from this year’s high of 314 basis points on June 8 amid a worldwide rally in corporate bonds. The gap reached 217 on Oct. 15, a 28-month low and the smallest since before Lehman Brothers Holdings Inc. collapsed.JPMorgan Investment Grade Corporate Emerging Market Bond Index (yield):
Setting up for an intermediate term short. The risk trade seems to be one sided - never a good bet. Yes, there is momentum and yes, there will be blood.
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