This box examines the drivers behind the prolonged resilience of US corporate bond spreads, prior to their recent abrupt widening, in order to better understand the risks of decompression. The previous compression was largely supported by a strong risk appetite and a compositional shift in bond issuance toward higher-quality firms. However, the need to refinance maturing debt in a high-interest rate environment – combined with a rapidly deteriorating risk sentiment – exposes US corporates to heightened vulnerability and increases their sensitivity to adverse shocks.
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