Credit Spreads Haven't Looked This Good Since the 2000s. Can They Get Better?

Credit markets closed 2024 on a high note. After years of volatility driven by pandemic shocks, rampant inflation, and aggressive monetary tightening, corporate credit spreads tightened meaningfully as investors pushed into yield-bearing assets and companies took advantage of a buyer-friendly backdrop to refinance and issue new debt. Headlines described spreads at levels not seen since the mid-2000s, and a record wave of issuance accompanied that move as borrowers raced to lock in financing on favorable terms. For investors, corporates and policy watchers, the central question heading into 2025 is whether today’s generosity can be extended: can spreads compress even further, or are markets flirting with a reversal that would make 2024’s bargains look fleeting?

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