Why the High-Yield Bond Boom Can Continue

Former junk bond king, Michael Milken, must be feeling a tinge of nostalgia -- boom times are back in the high-yield bond sector. But, this presents somewhat of a conundrum. On the one hand, global uncertainty remains high and forecasters are nearly falling over themselves to lower growth projections. Yet, at the same time, a deluge of capital is being directed at the most uncertain tranche of borrowers. This year, global bond issuance of the speculative-grade variety has swollen to more than USD 177 billion, up 96% over the same period last year. In the US alone, for the first nine months of 2010, companies have sold USD 172 billion in junk bonds -- already an annual record.

Fallen Angels and Rising Stars: Why the High-Yield Bond Boom Can Continue