As does Bloomberg senior credit analyst James Crombie:
“The spread-widening, downgrade, default and distress cycle feels similar to 2008, but we’ve never seen the U.S. economy shut down for a protracted period. If it stays closed through May the hit to businesses will be significant. If it’s a lot longer in places like New York City, where infection rates are jumping, bond issuers likely get hammered.
Consumers who’ve been furloughed aren’t likely to flock to debt-heavy sectors like travel, leisure, gaming or retail in any hurry –- even if they’ve got over the horror of being in crowded spaces. Add to that the shock of $20 oil and it’s hard to see credit coming roaring back.
Investors with cash want to believe in a robust rebound. In isolation, there probably are scattered opportunities to buy fundamentally-solid bonds that were jettisoned by those who needed cash when the markets tumbled. In aggregate though, credit markets are fraught with risks that still can’t be quantified.”