Dec 19 (Reuters) – Proving yet again that history rhymes
rather than repeats, just a few short years after an epochal
crash the search for yield just gets wilder and wilder.
Perhaps the best place to see this is in the corporate bond
market, where yields are at or near all-time lows while, by some
measures in key sectors, investor protections have never been
Don’t expect, though, to see a repeat of the bloodbath of
2008 and 2009, when markets froze and there was real fear that
normally viable companies would as a result hit the shoals. For
one thing, companies are more liquid and less leveraged.
Instead, the big risk for 2013 is that higher overall
interest rates make bonds issued in 2012′s rock-bottom rate
environment into big, but not catastrophic, losers.
Corporate borrowers have been a prime beneficiary of
monetary policy, as trillions of Federal Reserve bond buying
freed up money which then sought higher, if not safer, returns
elsewhere. That, indeed, was part of the plan, and investors
have streamed into riskier and higher yielding corporate bonds.