ICE BofA data shows that as of October 5th, the credit spread for US high-yield bonds with CCC ratings and below rose to 12.11 percentage points, nearly 2 percentage points wider than at the end of July; its effective yield reached 17.02% in early October, about 2.4 percentage points higher than in early August. During the same period, the yield on 10-year US Treasury bonds rose to 5.31%, meaning companies are simultaneously facing the double impact of rising risk-free interest rates and widening credit risk premiums. Moody's data shows that approximately $1.45 trillion in US investment-grade corporate bonds will mature between 2026 and 2030, most of which were borrowed when funding was virtually free. Refinancing at today's rates means profits must grow as fast as borrowing costs, otherwise the mathematical model will collapse. The futures market predicts that the Federal Reserve will raise interest rates 3-4 more times by early 2028. If high interest rates persist, corporate refinancing costs will rise significantly, and companies with weak cash flow and high leverage will be the first to face profit compression, rating downgrades, and default risks.
