Even the Junkiest Sovereign Debt Now Pays Less Than 6%

Central bank buying has distorted the market and reduced yields on the lowest-rated debt

To see how much central bank bond-buying has distorted market valuations, just take a look at the lowest-rated sovereign debt. The junkiest emerging-market bonds yield less now than U.S. Treasury bills did as recently as 1999. Yields on state debt of Mongolia, Ukraine and Belarus -- at seven levels below investment grade, among the world's lowest ranked -- have dropped under 6 percent in the past two months.

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