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Rising Credit Spread In Junk Bonds - This Red Flag Is Really Ominous

An expert in high-yield bonds warned last November that the default rate in the junk bond market might reach 33.5% in the upcoming 2-4 years. Most alarmingly, he predicted that the total default amount could be as large as $1.6 trillion. Martin Fridson, Chief Investment Officer of wealth management firm Lehmann Livian Fridson Advisors, forecast there would be a very moderate increase in default in 2015 and the average junk bond yield would gradually rise to 7.25%. Fridson, a widely respected research strategist, estimated the total debt size at $4.8 trillion -- an astronomical figure bigger than the current balance sheet of the…