In Feb - credit spreads widened a lot. So far this month some have come back. (Here I mean investmetn grade streads)


High Yield has about a .5 correlation with equity.


In any case, to your question elroy, companies go B/K because they cant service their debt. They can't refi because the underlying assets are not worth anything - or - are not throwing off enough cash.


Also it is not clear that KMV (which is now owned by S&P) has outperformed the rating agencies - how do you judge the performance of the rating agencies in the first place?