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Weekly Market Summary
Jan 26 to Jan 30, 2026
Extra Credit*
- CCCs screen historically cheap across both high yield bonds and leveraged loans, even as broader markets trade near all-time tights. CCC/B ratios are close to record highs, indicating significant relative value despite ongoing fundamental headwinds. Although CCCs represent a small portion of overall market value, they now account for a disproportionately large share of index-level spreads.
- CCC dispersion is elevated, with meaningful differences between bonds and loans. CCC loans are more sector-concentrated, particularly in software/tech, cable, and chemicals, and have higher first-lien exposure, slightly stronger rating mixes, and greater sponsor backing. However, structural challenges persist, including CLO concentration limits and a lack of natural buyers following downgrades. These factors continue to suppress valuations despite comparatively stronger structural positioning.
- CCC weakness is expected to persist longer in loans than in bonds due to technical and structural pressures. CLOs remain effectively forced sellers at the single-B/CCC boundary, while ongoing liability management exercises and cooperative structures add uncertainty and widen idiosyncratic outcomes. In contrast, high-yield investors generally face fewer constraints when investing in CCC bonds, supporting relatively stronger demand.
Morningstar as of 1/28/2026.
Previous reports
*Source: Morningstar®, Bloomberg, Credit Suisse. OAS is Options Adjusted Spread. 4-year discount margin is used for spread for bank loans. Yield quoted is yield-to-worst or equivalent calculation. YTD Low / High for yields are based on end of week and not intraday movements. Indexes and sub-indexes: Investment-grade corporates represented by Bloomberg US Corporate Bond Index. High-yield bonds represented by Bloomberg US Corporate High Yield Index. Bank loans represented by Credit Suisse Leverage Loan Index. The red and green arrows depicted under Yields, Option Adjusted Spreads, and Prices indicate a higher or lower value from the previous week.
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