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Front Running the Fed: Junk-Bond Buyers Score Easy Profits

  • U.S. junk bonds have returned more than 21% in 10-week frenzy
  • Fed’s plan to buy corporate bonds has investors rushing in
Passengers stand on board the Royal Caribbean Cruises. Navigator Of The Seas cruise ship at the Port of Miami in Miami on March 9.

Passengers stand on board the Royal Caribbean Cruises. Navigator Of The Seas cruise ship at the Port of Miami in Miami on March 9.

Photographer: Jayme Gershen/Bloomberg
Updated on

They are among the companies most devastated by the pandemic, like casino operator Golden Nugget Inc. and Royal Caribbean Cruises Ltd.

Yet in a stark sign of how the Federal Reserve has swept away normal standards of risk, investors are pouring billions into funds that buy up the debt of such companies -– all rated junk and, in many cases, distressed.