Junk Bond Rates Have Room to Grow
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Interesting fact buried in an article about the woes of builders in today's market:
The credit spread between Treasury bonds and corporate and other debt was at 2.5% to 3% earlier in the year. What with current problems, the spread has slipped to 6%. That's a problem, yes, but things have been far worse in the past. "During the past two recessions, spreads increased to almost 12% (Mueller, 78)."
Looks to me like things could get a bit worse before they get better.
Reference
Mueller, Mark. Standard Pacific Corp. Bets Against Itself with Stock Offering. Orange County Business Journal. 15 October 2007. 78.