If you want to see where market stress actually hits first, look at the gap between B-rated and CCC-and-below high-yield debt. Looking back over the last 30 years: In quiet markets, B and CCC spreads track reasonably close together. In times of crisis (2001, 2008–2009, 2016, 2020), the spread on CCC-rated debt explodes upward relative to B.
What’s happening today: CCC & Below Debt: Spreads sit at 12.53%, trading well above their long-term average (~10.98%). B Debt: Spreads sit at 3.10%, remaining well below their long-term average (~5.16%).
💡Takeaway: Broad high-yield averages can mask underlying fragility. While B-rated spreads reflect calm, the blowout in CCC-rated debt above its historical mean shows that credit stress is quietly building at the bottom tier.
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