Surging Inflation No Problem, Junk Bond Yields Drop to Record Low, Dish out Negative “Real” Yields to Fed-Whacked Investors | Wolf Street

Those CCC-and-below-rated bonds are the only category in the US corporate bond spectrum whose average yield is above the rate of inflation.

Everything else has negative real yields, where the purchasing power of capital is being destroyed by inflation, while yields are too low to compensate for that loss of purchasing power. And there is nothing, zilch, nada in terms of compensation for the substantial risk of default and getting mostly wiped out during a debt restructuring.

The average yield of B-rated bonds – “highly speculative” – dropped to a record low of 4.46%, or to a negative real yield of -0.53%. And the average yield of BB-rated bonds – “non-investment grade speculative” – dropped to a record low of 3.27%, or a negative real yield of -1.73%.

Surging Inflation No Problem, Junk Bond Yields Drop to Record Low, Dish out Negative “Real” Yields to Fed-Whacked Investors | Wolf Street