High Yield spread (BAMLH0A0HYM2)
HY OAS
What it is
Option-Adjusted Spread of US high yield corporate bonds (junk bonds), published by ICE BofA. Measures the risk premium the credit market demands on speculative companies vs Treasuries. THE corporate credit stress barometer.
How to read it
HY OAS < 400 bp = credit complacency, excellent financing conditions. 400-600 bp = normal. > 800 bp = serious stress, rising default risk. > 1000 bp = credit panic (Mar 2020, late 2008) — often a historic buy opportunity for risk assets.
Common reference points
- Credit complacency< 400 bp
- Normal conditions400 – 600 bp
- Moderate stress600 – 800 bp
- Severe stress800 – 1200 bp
- Credit capitulation> 1200 bp
Orders of magnitude, not a rule: the same number does not mean the same thing from one sector to the next.
What it does not tell you
HY OAS tracks VIX and flows closely. Its predictive role is limited — it INDICATES stress as it arrives, rather than anticipating it. But its stability at low levels is a system health signal.
Other measures — Macro — stress & sentiment
Educational content. Polaris is not a registered investment adviser and makes no recommendation.