Risky corporate borrowers are now emerging as one of the biggest casualties of central bank tightening.
As a result of this selling, the average yield in the $US1.7 trillion junk bond market has now jumped to around 8.5 per cent . And the bonds issued by the more heavily indebted companies – those with a triple C rating – now yield around 14 per cent.
The twin scourges of rising interest rates and a darkening economic backdrop has also caused investors to pull back from the $US1.3 trillion leveraged loan market. Not surprisingly, the freezing up of the leveraged loan market has put a dampener on takeover activity.
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