Speculative-grade rated companies have been able to tap into the markets on the heels of record-low borrowing costs and increased high-yield demand. Consequently, Goldman contends that all the refinancing will help speculative-grade companies mitigate potential hiccups down the road, or diminish potential defaults. However, the firm still warned that junk bonds are not completely immune to a weakening environment.
“Barring a recession scenario, this should help mitigate default risk in the high yield market,” Goldman analysts said.
SPDR Barclays High Yield Bond ETF
For more information on speculative-grade debt, visit our junk bonds category.
Max Chen contributed to this article.