High Yield Spreads Near Record Highs

After surging more than 150 basis points in the last week, the spread between high yield bonds and comparable treasuries has surged to 1,096 basis points based on the Merrill Lynch Index of High Yield Bonds.  Additionally, at current levels the spread is only 2% off its record high from October 2002.  In other words, with the 10-Year US Treasury currently yielding about 3.75%, companies with 'junk' rated credit currently have to pay just under 15% to borrow money.

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