Quality junk
The high-yield market has come under considerable pressure lately, with mutual funds suffering substantial outflows and a less than accommodating primary issue market. But this slowdown comes after a period of healthy supply in the junk arena, which could herald marked deterioration in default rates as the market plays out.
The chart below, provided by Stephen Peacher, chief investment officer at Putnam Investments, shows that during periods of high issuance in the credit cycle, the quality of
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