Figure: Spreads of Corporate Bond Yields over Comparable Off-the-Run Treasury Yields, by Securities Rating, 1998-2008

Data are plotted as three curves. The high-yield bond spread fluctuates between 2.6 percent and 8.4 percent. It begins around 3 percent in 1998, rises to about 6 percent in late 1998, and then generally rises to peak near 8 percent three times: in 2000, 2001, and 2002. It then generally falls to just under 4 percent by 2004, where it fluctuates within a relatively narrow range through mid-2007. It then generally rises, reaching about 6 percent by the beginning of 2008. The BBB and AA spreads exhibit similar patterns but fluctuate within narrower and lower ranges: the BBB between 0.7 percent and 3.2 percent and the AA between 0.4 percent and 2 percent.