Opportunities emerge in a higher-yield world | 12 Jun 2026

Nuggets

Opportunities emerge in a higher-yield world | 12 Jun 2026 | Russell Investments · Nuggets

Mega IPO Wave & Benchmark Risk [00:02:04]: The broader market is seeing a wave of mega IPOs, with SpaceX listing on Friday and OpenAI filing confidentially. While large IPOs create near-term volatility, a critical watch point is how and when these companies enter major benchmarks and what that means for passive flows and index concentration.
SpaceX Credit Profile [00:02:25]: While SpaceX is not yet officially rated by credit agencies, it has reported publicly on securing an investment-grade credit rating and securing a $20 billion bridge loan to restructure outstanding debt. This positions the company's fundamentals in line with a strong "rising star."
Corporate Credit Fundamentals [00:02:44]: Overall credit fundamentals remain supportive. Investment-grade (IG) and high-yield (HY) spreads held at levels close to the prior month-end, sitting around 75 basis points and 265 basis points, respectively.
All-In Yield Demands [00:02:55]: All-in yields remain highly attractive, with IG yields near 5.5% and HY yields around 7.2%. These elevated levels continue to support robust demand from both institutional and retail channels, particularly given low default rates and modest corporate leverage.
AI Disruptions in Software Credit [00:03:16]: Analysts are closely monitoring the potential impact of artificial intelligence on software business models and its subsequent effect on credit markets. At present, this risk appears concentrated within leveraged software issuers, where roughly 30% of US software leveraged loans are trading at spreads consistent with implied Triple-C rated bonds. The possibility of a broader spillover into public credit markets remains an important watch point.
High-Yield Spread Divergence [00:03:41]: Within the high-yield space, lower-quality credits underperformed. Triple-C rated bonds widened in spread by 56 basis points during the month, while higher-quality Double-B and Single-B rated bonds tightened by 9 and 6 basis points, respectively.
Issuance Technicals [00:04:01]: May marked the first month since September of last year without any investment-grade issuance from tech hyperscaler companies. Even so, strong demand and attractive yield levels continue to provide solid technical support for both the investment-grade and, to a lesser extent, high-yield markets.

Opportunities emerge in a higher-yield world | 12 Jun 2026 | Russell Investments

1. US Rates Markets: Labor & Inflation Dynamics

References

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Opportunities emerge in a higher-yield world | 12 Jun 2026 | Russell Investments

1. US Rates Markets: Labor & Inflation Dynamics

References

More nuggets

Robert Kaplan Exclusive | India's Growing Economic Potential Amid Global Challenges

BofA: The Consumer’s Summer Spending Surge | 15 Jul 2026

Must Read Research: SpaceX; The Next AI Winners; Europe’s Earnings Momentum; Buy Value | 14 Jul 2026

2. Credit Markets & Mega IPOs

3. Emerging Markets Divergence & Opportunities

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