Structural Spread Tightening

While US IG index spreads are near historic lows (71bps), BofA analysis suggests structural shifts in price, liquidity, and maturity have effectively tightened the index by 16bps since 2021.

Key Takeaways

• 1.The Bloomberg IG index spreads reached 71bps in Jan-2026, the tightest level since 1998.
• 2.Structural changes have made the IG index 16bps tighter compared to June 2021, meaning current spreads are effectively equivalent to previous cycle lows.
• 3.Lower average bond prices (dropping from $110 in 2021 to $95 currently) are the largest structural contributor to spread tightening, accounting for -6bps.

Table of Contents

• Structural spread tightening
• Big changes over the past five years
• Daily supply snapshot
• Daily dealer inventories update
• Daily HG fund flows
• Daily foreign demand tracker
• Common abbreviations
• Special Disclosures
• Disclosures

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