That’s giving comfort to corporate bond investors. The cost to protect high-grade debt against default has dropped to around its lowest level since mid-November. Micron Technology Inc. on Monday sold $1.8 billion of notes with investment-grade ratings from two firms and junk grades from S&P Global Ratings. The securities had almost six times as many orders as there were notes for sale.
Amid the demand, supply has been light. U.S. investment-grade bond sales for the year are at their lowest levels since 2015, according to data compiled by Bloomberg. High yield is the slowest since 2016.
“The Fed is saying risk is OK, the party is going to play on for a while,” said Mark Spindel, chief executive officer of Potomac River Capital in Washington. “Speculative assets have a lot of runway to keep going, if the Fed keeps interest rates low and lets markets run a little bit hotter.”
This article was provided by Bloomberg News.