The riskiest US corporate loans are experiencing severe distress: Split B and CCC rated loan prices have declined -9% YTD, marking the worst performance among all credit categories. These are the lowest-rated leveraged loans, typically issued by highly indebted or financially stressed companies, and are most sensitive to rising default risk. At the same time, higher-quality rated loan prices have remained relatively stable, hovering near -1% to -2% throughout the year. As a result, the performance gap between junk-rated loans and investment-grade debt has widened to ~8 percentage points, the widest in years. Meanwhile, the total value of distressed US Dollar loans jumped to 71.8 billion in October as a growing number of corporate loans fell into distressed territory. Investors are increasingly avoiding the riskiest debt.(The Kobeissi Letter)