hard · Corporate Credit Analysis ratings

During a credit cycle peak, which of the following combinations of indicators would an analyst most likely observe?

  1. Low default rates, tight spreads, and unusually strong maintenance covenants across all new deals.
  2. Widening high-yield spreads paired with low LBO leverage and a high CCC-rated issuance share.
  3. Low high-yield spreads, high LBO leverage multiples, and high covenant-lite issuance share.
  4. High default rates, elevated recovery expectations, and depressed new-issuance volumes overall.

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