Corporate bond defaults spike bond yields, hitting lower credit companies hardest.
The study looked at how bond default events affect bond yields. They found that after a company defaults on its bond payments, the bond yields of other companies in the same industry go up. This increase in bond yields is more significant for lower credit quality companies and those that are not listed on the stock market. Defaults in publicly listed firms, state-owned enterprises, or medium-term notes also have a big impact on bond yields.