Corporate Bonds Set for Worst Yearly Loss Since Financial Crisis

(Bloomberg) -- U.S. investment-grade credit spreads are at the highest level in more than two years as the market nears the end of 2018 with the worst returns in a decade.

High-grade bonds are returning -2.75 percent this year as of the start of the final trading day of 2018, which is the biggest loss since the asset class lost 4.94 percent in 2008, according to the Bloomberg Barclays U.S. corporate index. The market has been battered by rising interest rates.

Investment-grade bond spreads held at 152 basis points Friday. That’s unchanged from the day before and the widest since July 7, 2016. The index has widened almost every day since Dec. 14 and most trading sessions this quarter. The index updates once per day.

Meanwhile, the benchmark junk bond index tightened on Friday. It narrowed to 522 basis points after touching the widest level since Aug. 2016, which was 531 basis points.

To contact the reporter on this story: Christopher DeReza in New York at cdereza1@bloomberg.net

To contact the editors responsible for this story: Tom Freke at tfreke@bloomberg.net, Randall Jensen

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