Although low interest rates haven't conquered unemployment in the rich world, they're having a big impact elsewhere. Junk spreads are exceptionally low and the issuance of bonds with weak underwriting standards has soared. Yield-starved investors are gobbling up new "covenant lite," "payment in kind" and "dividend recapitalization" bonds at a faster pace than during the credit bubble.
One recent beneficiary of this "dash for trash" is the small landlocked country of Rwanda. Last week, the government of Rwanda sold $400 million in dollar-denominated 10-year bonds at an annual yield of just 6.875 percent and a bid-to-cover ratio of nearly 10. (Typical U.S. sovereign debt auctions have a bid-to-cover ratio between 2 and 3.)