If Party City’s results this week are anything to go by, then it might be time for high-yield bond investors to call a cab.
Despite being the riskiest part of the mountain of debt that has been raised in recent years, high-yield, or “junk”, bonds have held up well in the face of unrelenting equity volatility, tighter monetary policy from the US Federal Reserve, rising inflation, disrupted supply chains and war in Europe. That is, until recently.
Party City kicked off a week of disappointing earnings results that helped the junk bond market spring from its slumber. The company came under pressure in the first quarter from constrained helium supply and soaring prices just as demand is escalating ahead of the US graduation season.
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