Goldman, Morgan Stanley Diverge on Junk Bonds: Credit Markets

Morgan Stanley says investors should buy the lowest-rated corporate debt, while Goldman Sachs Group Inc. says stay away, underscoring the dilemma faced by investors as junk-bond prices rise to the highest since 2007.

Bonds graded CCC in the U.S. are the “cheapest” high-yield securities with “economic data once again beginning to surprise to the upside,” Morgan Stanley told clients yesterday in a report. Goldman Sachs says higher-rated speculative-grade debt is the way to go as the economy decelerates.