Junk Bonds Reach Par for First Time Since 2007: Credit Markets
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Investors in U.S. junk bonds are wagering they’ll be fully repaid for the first time since before the credit-market seizure, dismissing concerns the economy will return to a recession and trigger a rise in corporate defaults.
Average prices on high-yield debt rose above 100 cents on the dollar yesterday for the first time since June 2007 after falling as low as 55 cents in December 2008, Bank of America Merrill Lynch index data show. Bonds due in 2031 from Ford Motor Co., which fell 22 months ago to 12 cents on concern the automaker would fail, are trading above par for the first time in more than five years.