Norwegian Bonds Following the Pattern

History does repeat itself. In the latest Corporate Credit Report by Nordea’s Lars Kirkeby, we noted an interesting relationship between spreads and default rates, which Mr. Kirkeby was kind enough to expound upon.

High yield industrial credit spreads have declined sharply from their highs earlier this year. The single B spreads have declined from 1300 bps to 762 bps, while BB declined from nearly 700 bps to 300 bps. This is reflected also in the iTraxx 5-year crossover Index of high yield CDS, which has declined from an all-time high of 1,150 bps in March to an average of

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