Bubblewatch - junk bonds
High yield bond sales in 2013 have climbed precipitously to more than double the level at the height of the credit bubble in 2006. According to Bloomberg data bonds rated below Baa3 by Moody’s Investors Service and lower than BBB- at Standard & Poor’s have multiplied more than twofold to $373.2 billion this year, a new all time record, compared to a measly $149.2 billion in 2006, the year before the start of the credit crisis. These bonds are high risk, and investors ask for a higher return as compensation. Except that now the extra yield they are demanding (the "spread" over certain government bond yields) has fallen to the lowest level since the crisis began in earnest. The premium is now only 411 basis points, or 4.11%, this data comes from Bank of America Merrill Lynch. No, definitely can't see a bubble here either..
