‘Total meltdown’ in the riskiest US debt pushes high-yield risk premiums to a 17-month high
Junk-bond spreads have widened and issuers have pulled the most deals of the year, while SoftBank’s $11 billion high-yield sale at up to 9.75% shows the price of funding AI spending.
Parts of the high-yield bond market are seeing a rapid downturn, triggered by intensifying investor concern about how the most vulnerable companies will cope1. The slide in the riskiest debt has been called a “total meltdown”1,2.
The average risk premium for US high-yield debt climbed to a 17-month high2. Primary markets notched the year’s biggest spate of pulled offerings2. The downturn is concentrated in parts of the high-yield market rather than spread evenly across it1.
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SoftBank’s costly borrowing
SoftBank shows what that repricing means for a large borrower. The group raised $11 billion in high-yield bonds at yields of up to 9.75%, a price tag that one analysis says comes with a patience test for investors3. The sale, first reported on 14 October, was SoftBank’s largest-ever high-yield bond offering4.
One of the bonds matures in 2034 and carries an annual coupon as high as 9.75%5. Credit markets are signalling concern over when SoftBank’s investments will start to pay off3.
SoftBank has also redeemed a 2.875% euro note early, as credit markets turn a harder eye on its AI spending4. Commentary on its founder, Masayoshi Son, has grown blunt, with one piece warning that his “fuse is about to blow”5.
Why it matters to investors
Not every reading is as dark. One analysis says credit spreads have recently increased in a way that improves the risk-adjusted returns of high-yield corporate bonds, and describes spreads as normalising6. On that view, the SPDR Portfolio High-Yield Bond ETF offers a 7.4% yield6.
The two readings describe the same move. Wider spreads raise the income on offer to buyers6, and they raise the cost of borrowing for the weakest issuers at the same time1,2.
The pulled offerings are a sign of strain in the market where companies raise new debt2, and the concern is centred on how the most vulnerable companies will cope1. SoftBank’s coupons show how much investors now demand to fund long-dated AI spending3,5.
What to watch
The next signals are whether the high-yield risk premium keeps rising from its 17-month high2, whether pulled offerings return to the market2, and how credit markets keep pricing SoftBank’s AI spending as investors weigh the timing of its returns3,4.
Sources
- ‘Total Meltdown’ in Riskiest Debt Unnerves Market: Credit Weekly - Bloomberg.com, bloomberg.com (2026-10-24)
- ‘Total meltdown’ in riskiest debt unnerves market - AFR, afr.com (2026-10-25)
- SoftBank’s $11 Billion Bond Comes With a 9.75% Price Tag — and a Patience Test, ad-hoc-news.de (2026-10-25)
- SoftBank Wipes Out 2.875% Euro Note Early as Credit Markets Turn a Harder Eye on Its AI Spending, ad-hoc-news.de (2026-10-25)
- Masayoshi Son’s Fuse Is About to Blow - 36氪, eu.36kr.com (2026-10-24)
- High-yield bond ETF SPHY offers 7.4% yield amid normalizing credit spreads. - Pluang, pluang.com (2026-10-25)
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