Is There A US Corporate Credit Bubble? Yes Says UBS

Is there a US corporate credit bubble? That’s the question explored in a Global Macro strategy research note from UBS.

Sent to clients at the beginning of this week, the note put together by UBS’s macro strategists Matthew Mish, CFA and Stephen Caprio, CFA explores the thesis that there is a bubble in speculative grade credit.

Average Corporate Credit Rating Hits 15-year Low

The bubble hypothesis originates from the fact that easy money policies from central banks have kept ‘zombie’ firms afloat and QE programs have triggered substantial inflows into credit funds, igniting a material reach for yield since 2012. This has translated into elevated competition, easing credit standards, and massive issuance.

UBS’s analysts go on to speculate that as much as $1...