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(Bloomberg) -- The private debt boom, central bank support, high Treasury yields and investor base changes are keeping credit spreads artificially tight, according to junk bond guru Marty Fridson.

But the likelihood of losing money in corporate debt hasn’t diminished, Fridson, whose debt analysis has been studied by Wall Street for decades, wrote in a report Thursday. That leaves the market vulnerable to significant repricing in the event of an economic downturn.

“Risks to high-yield investors involving default probability, loss given default, illiquidity, and volatility have undergone no revolutionary change that justifies narrower average spreads than were observed in the past,” the chief executive officer of FridsonVision High Yield Strategy wrote.

High-yield bonds have been extremely expensive for 12 straight months, according to Fridson. Junk spreads should be 453 basis points — compared to 258 basis points at the close on Thursday — to account for prevailing credit availability, economic indicators, default rates, Treasury yields and quantitative easing, his analysis shows.

Debt pricing has been squeezed by lack of supply, as borrowing by risky companies moved to private markets and demand for yield surged. Fridson notes a drop in outstanding high-yield bonds to $1.37 trillion from a peak of $1.55 trillion in 2021, even as investable wealth grew.

“Tight spreads that merely reflect scarcity value do not demonstrate that default risk has decreased,” he wrote.

In addition, spreads are distorted by a belief that the Federal Reserve will step in if there’s stress, as it did when the economy shut down because of the global pandemic in 2020. “That is to say, a more or less guaranteed backstop to the credit markets anytime a surge in corporate failures appears imminent,” said Fridson.

Fridson also notes a perceived shift in the high-yield investor base to include more long-term buyers and fewer hedge funds. In addition, elevated interest rates have shifted focus to all-in yields, which are high in historical terms.

Despite all that, Fridson says he won’t be changing his high-yield valuation model. He adds that junk spreads can stay below 300 basis points so long as the economy is growing and there’s not enough supply — but they will likely flare to 1,000 basis points again when recession finally hits.