Credit Risk Is Staging a Comeback

For years, investors poured money into junk-rated corporate debt with impunity. Arguably, bonds were bought indiscriminately, with seemingly little thought about the actual risk of a company defaulting on its debt.

Interest rates, after all, were hovering at zero percent, money was plentiful, and there seemed little likelihood that a company would find itself suddenly starved of credit. With corporate default rates forecast to remain stubbornly low, one junk-rated company was pretty much the same as another.