NEW YORK, June 21 (Reuters) – The spreads between U.S. investment-grade corporate bond yields and U.S. Treasuries have surged to their highest in over three months, in a sign of risk aversion due to political uncertainty in France and as U.S. government bonds rallied.
Spreads indicate the premium investors demand to hold corporate bonds rather than safer government securities. The spread on the ICE BofA U.S. Corporate Index (.MERC0A0), opens new tab, a commonly used benchmark for high-grade debt, rose to 96 basis points this week, its highest since mid-March.
Separately, the Markit CDX North American Investment Grade Index , a basket of credit default swaps that serves as a gauge of credit risk, widened to an intra-day high of over 54 basis points on Friday, its widest since May 1.
The moves followed turmoil in French financial markets where, ahead of France’s surprise parliamentary elections, investors sold government bonds because of…
