Junk bond investors are growing wary as the index of CCC rated bonds in the US dropped almost 0.8% last month. Distressed US dollar loans hit $71.8 billion in October, the highest since Trump’s tariff policy announcement. Spreads between investment-grade bonds and junk have widened, signaling a preference for safer bonds.

High-yield bond spreads have resisted gravity this year, despite potential trouble signs. Recent weakness in junk bonds indicates a shift, particularly for riskier securities. CCC debt spreads widened more than other high-yield debt, showing investors are becoming more cautious. The market may be signaling a turn towards risk aversion.

October saw a surge in distressed bond supply, reaching $72 billion, marking the second consecutive month of increasing supply. Leveraged loan market deals are being shelved, with Energos Infrastructure canceling a $2 billion junk-debt sale. Investors pulled $1.3 billion from bank loan exchange-traded funds in October, the largest monthly outflow since April.

Global bond sales hit a record $5.95 trillion this year, driven by AI-related borrowing and acquisitions. Japanese firms are borrowing overseas at record levels, shaking up global markets. Country Garden Holdings Co. is finalizing a $14.1 billion offshore debt restructuring. A group of banks is considering private credit firms for a $12.25 billion debt financing for Blackstone and TPG’s Hologic acquisition.

Read more at Yahoo Finance: Fear Is Coming Back to the Junk Bond Market