CA Private Investigator Asset Investigations BOND MARKET GROWING RISKIER

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EMPIRE SPECIALIZED INVESTIGATIONS (949) 645-1492
WALL STREET JOURNAL
Bond Markets Are Growing Riskier
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Bond markets are growing riskier as investors seeking steady returns
bid up prices and ignore some early warning signs similar to those
that flashed during the credit bubble.

Last week, prices on high-yield, or junk, bonds hit their highest
level since 2007, nearly double their lows of the credit crisis. Nine
months into the year, companies have sold $172 billion in junk bonds,
already an annual record, according to data provider Dealogic.

To some extent, the bull case for junk bonds is based on a declining
rate of corporate defaults lately and a belief that, as long as the
economy doesn't relapse into recession, default rates will continue to
decline. The financial crisis purged many weak borrowers from the
system, and corporate balance sheets are generally stronger today than
before the crisis. However, a double-dip recession could hurt another,
albeit smaller, wave of borrowers.

The U.S. high-yield default rate fell to 5.1% in August from 13.2% a
year ago, Moody's Investors Service reported recently, adding it
expected the rate to fall to less than 3% by the end of the year.


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