A funny thing happened on the way to economic growth: Top-rated corporate bonds increasingly became interchangeable with sovereign debt.
This is strange because companies are not governments. They don't collect taxes or print money. But big companies like Apple and Anheuser-Busch InBev arguably have much better balance sheets than many countries, and some central bankers have started buying corporate bonds to stimulate their regions' economies.
Besides, the company bonds offer a smidgen more yield than the sovereign debt of developed countries. So it's not surprising that yields on corporate debt globally have dropped to a record low of 2.2 percent.
Or that investors are demanding the smallest premium to own the company notes compared with government debt in more than a year.
Or that investment-grade bond funds have seen some record inflows.
Or that companies, including Apple and Anheuser-Busch, have been selling debt at an accelerating clip.
There's a good chance that corporate-bond yields will continue to fall as money continues to flood toward the debt. After all, it's easy to see the attraction for pensions and insurers looking for worthy investments amid a $13.4 trillion sea of negative-yielding bonds.
But the longer this trend continues, the more countries' economies become intertwined with the fortunes of huge corporations. And despite investor sentiment, the interests of nations don't always align with those of companies.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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