The chart below illustrates the average credit spreads of U.S. corporate bond issues by ratings over...

Transcribed Image Text:

The chart below illustrates the average credit spreads of U.S. corporate bond issues by ratings over U.S. Government Bond yield from June 2009 to October 2020: 5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 Average % 10-Year Bond Spreads over US Government by Ratings AA 0.81 A 1.08 BBB 1.75 BB 3.54 B 4.42 Explain why there is a substantial jump in bond spreads between BBB and BB rated corporates compared to differences between the other adjacent rating categories. What are bonds rated BB+ or weaker commonly called? Name 4 of the main characteristics typical of the issuers of these bonds? The chart below illustrates the average credit spreads of U.S. corporate bond issues by ratings over U.S. Government Bond yield from June 2009 to October 2020: 5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 Average % 10-Year Bond Spreads over US Government by Ratings AA 0.81 A 1.08 BBB 1.75 BB 3.54 B 4.42 Explain why there is a substantial jump in bond spreads between BBB and BB rated corporates compared to differences between the other adjacent rating categories. What are bonds rated BB+ or weaker commonly called? Name 4 of the main characteristics typical of the issuers of these bonds?

Answer rating: 100% (QA)

The substantial jump in bond spreads between BBB and BB rated corporates is because the perceived ri... View the full answer