Credit Risk Expected to Rise

Visual Finance today raised the Credit Risk Outlook to its highest level, signaling a substantial detoriation in credit quality is expected within the next 18 months. Reason: rising bond yields (higher inflation expectations), very tight credit spreads, lofty equity valuations, high M&A activity, global imbalances.
Credit Spread 31.03.2006
Lehman US High Yield Corporate Bond Index versus
Lehman US Treasury Index

Global Speculative-Grade
Bond Default Rate (Issuer weighted)
February 2006
Moody's

 

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