US High-Yield Newsletter – 9M’26

US HY returned 0.1% in 9M’26, outperforming US Treasuries (-2.8%) as coupon income cushioned rising yields. Primary issuance increased to USD 285bn from USD 261bn in 9M’25 despite fewer deals, reflecting larger transactions and sustained refinancing demand. Communications accounted for 29.3% of supply, up from 17.1%, while Consumer Discretionary fell to 19.9% from 30.6%. Credit risks remained uneven, with BB spreads at 194bps vs. 1,179bps for CCC-rated and lower bonds. Although spreads widened from their August lows, they remained below the long-run median, while the 8.16% effective yield continued to support returns. 

In 4Q’26, returns are likely to remain carry-driven, with limited scope for further spread compression. Investors should favour higher-rated issuers with resilient cash flows and refinancing capacity, while monitoring Treasury yields, CCC spread widening, and upcoming maturities as higher borrowing costs could intensify pressure on weaker credits.