The trailing 12-month default rate for global speculative-grade companies was 2.7 percent at the end of the second quarter, 2.1 percentage points below the historical average of 4.8 percent, according to a July 10 report from Moody's.

High-yield bonds have returned 9.66 percent this year, including reinvested interest, Bank of America Merrill Lynch indexes show, compared with 8.99 percent for the Dow Jones Industrial Average when including dividends.

"Just with the dearth of yield out there, there continues to be a high level of demand" for riskier securities, Brian Nold, senior high-yield portfolio manager at Seix Investment Advisors LLC and sub-adviser of the RidgeWorth Seix High Yield Fund, said in a telephone interview. "It's created the opportunity for companies to come to the market and access the capital markets."

U.S. junk-bond issuance rose to $22.2 billion last month, the most since April, Bloomberg data show. Sales this year have totaled $174.3 billion.

The increased demand for riskier assets has driven down yields on junk-rated debt to within 30 basis points of the all- time low. Yields dropped to 7.45 percent yesterday, compared with a record low of 7.19 percent set on May 19, 2011, according to the Bank of America Merrill Lynch U.S. High-Yield Master II bond index.

Difficult Refinancing

While high-yield companies are benefiting from those lower rates, they aren't doing so recklessly, and that has boosted their appeal as Europe's strains and a weakening global economy increase volatility in financial markets, according to Eric Takaha, a director of corporate and high-yield debt for Franklin Templeton's fixed-income group that manages more than $350 billion.

"They've taken advantage of the strong demand, but I think the fact is that they haven't really been as aggressive with their balance sheets as they could have been given the amount of money flowing into the asset class," he said in a telephone interview from San Mateo, California.

While high-yield liquidity is healthy, borrowers rated B3 or less may find it difficult to refinance their debt because access to credit markets has diminished for lower quality companies, Moody's analysts led by Kevin Cassidy wrote in a report. The 25 largest companies with "high credit risk" as defined by Moody's hold $74 billion of junk debt maturing between 2012 and 2016, according to the report.

"The lower a company's credit rating, the more difficult it will likely be for it to refinance at manageable rates," the analysts wrote.

Funding Risks

Companies including Clear Channel Communications Inc., Texas Competitive Electric Holdings Co. and Caesars Entertainment Corp. may need to restructure, particularly if businesses don't improve. European sovereign debt concerns and a slowing U.S. economy could further impede access to funding, according to Moody's.