Global high-yield credit market stress is surging: Investors now demand +6.4 percentage points of extra yield to hold CCC-rated global corporate bonds over BB-rated bonds, the biggest premium in 14 months. CCC bonds sit at the lowest tier of investable corporate debt, while BB bonds represent the highest-rated segment of high-yield credit, just below investment grade. Furthermore, CCC global corporate bond spreads are now 4.8 times wider than BB bond spreads, the biggest gap in at least 12 years, signaling a historic divergence in credit risk between the lowest and highest quality junk corporate borrowers. By comparison, this gap stood at ~2.2 times in 2019 and ~3.2 times in 2024. This comes as resurging drives rates higher, putting severe pressure on heavily indebted companies that loaded up on cheap debt in 2020 and 2021 when interest rates were low. Highly leveraged companies are facing significant financial strain.(The Kobeissi Letter)