A volatile cocktail of decade-high insolvency rates and booming investor appetite has driven short-seller Bronte Capital to begin betting against corporate debt, hoping to cash in if the companies behind the loans go bust.

Bronte founder John Hempton has told his investors that the so-called junk rally – which this year drove global equities to their best quarter since 2019 – had allowed “very suspect companies to obtain billions of dollars of debt”.