Investor interest in junk bonds rebounded sharply last month as strong returns from the sector fuelled a sharp increase in issuance.
In recent weeks, money has again poured into US funds focused on buying junk bonds – debt issued by risky companies with relatively high levels of debt and lower credit ratings.
Demand for higher-yielding bonds has intensified in response to reduced concern about the eurozone debt crisis and expectations that the US Federal Reserve will keep its interest rates at near-zero levels for at least another year.
Junk bonds, also called high-yield bonds, are pricing in a slowdown in growth – but are not factoring in a double-dip recession.
In July, junk bond returns were 3.4 per cent, according to BofA Merill Lynch indices. Bonds from less risky companies with investment grade ratings were up 1.9 per cent, with 10-year US Treasury debt down by 0.2 per cent.
根据美银美林(BofA Merill Lynch)相关指数，7月份垃圾债券的收益率为3.4%。风险较低、拥有“投资级”评级的公司的债券收益率上升1.9%，而美国10年期国债收益率下降0.2%。
Oleg Melentyev, strategist at BofA Merrill Lynch, said that the combination of low, but positive, US growth and low interest rates was “the best environment for high-yield credit”.
Higher interest rates tend to affect bonds adversely because prices on existing debt falls as yields rise, and a stronger growth environment tends to favour even riskier investments such as equities.
BofA Merrill Lynch is not forecasting negative US growth – a double-dip recession – which could lead to increased corporate defaults. “[A] double-dip [recession] is the greatest concern anyone in this market has,” said Mr Melentyev.
In July, global sales of new junk bonds reached $26bn, according to Dealogic.
That compares with $12bn in June and $7.2bn in May, when jitters about the eurozone debt crisis meant that investors remained on the sidelines.
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