No Buyers More Scary to Junk-Bond Investors Than Default
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High-yield investors are more worried that no one will bid on their bonds than they are about the risk of companies defaulting.
At a time when the default rate for below investment-grade companies is holding at about half its historical average, junk-bond investors are increasingly concerned that they’ll be unable to sell when they want to. That’s why some analysts aren’t ready to recommend plowing back into the notes even after yields soared as high as 6.7 percent on Oct. 15 from an all-time low of 5.7 percent in June.