From Yahoo Finance: 2025-04-09 11:06:00

World stocks have plunged, sparking recession fears, impacting corporate funding markets. The global corporate bond market, growing by 40% since 2008, sees a spike in the premium for low-rated corporate credit. Concerns arise regarding liquidity, potential sales, and the cost of insuring against debt defaults for European businesses.

Companies like German energy group RWE and three Japanese firms postpone bond sales amid market turmoil. Investors worry about contagion and liquidity drying up. Analysts predict more turbulence in the high-yield market but remain optimistic about lower-risk debt. Record inflows into U.S. dollar and euro-denominated investment-grade debt funds last year pose a risk of outflows.

Investors and analysts foresee widening credit spreads and potential defaults in the high-yield market. A pessimistic scenario could see the global default rate exceeding 8% in a year. The market dynamics shift due to a negative economic shock from tariffs, affecting all businesses. The Fed may need to intervene to stabilize credit markets, but uncertainties remain.

Read more: Corporate credit tremors in aftershock of tariff-led stock rout