An appetite for junk

摘要

When cash deposits pay virtually zero, investors have an incentive to take risks in search of higher returns. That has been good news for the high-yield, or junk, bond market, where companies with poor credit ratings (below the investment-grade threshold of BBB) turn for finance. Many companies can now borrow at rates that governments would have been pleased to achieve two decades ago. Indeed, so low have borrowing costs fallen that some wags have dubbed the market 'the asset class formerly known as high-yield'. Until the hiatus related to the budget crisis in America, companies were rushing to take advantage of this financing opportunity. In the first nine months of the year global high-yield-bond issuance reached $378.2 billion, up by 27% on the same period in 2012, according to Dealogic, a financial-data firm. Sprint, an American tele-coms company, raised $6.5 billion in two simultaneous bond issues, the largest-ever junk financing.