In the current low rate environment and slowly expanding economic conditions, the dropping corporate debt yields reflect investors’ confidence that highly rated companies will remain afloat, or the lower probability of defaults.
U>S. companies have sold $618 billion in investment-grade debt this year, the most on record and up from $557 billion for the same time last year. Meanwhile, investors have funneled $33.5 billion into high-grade U.S. corporate-debt mutual funds so far this year, compared to $21 billion for all of 2013.
iShares iBoxx $ Investment Grade Corporate Bond ETF
For more information on corporate debt, visit our corporate bonds category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own shares of LQD.