Junkiest of debt outperforms AAA-rated paper


"How long can this last," asks Bloomberg's James Crombie, looking at the divergence since July of the lowest rated junk bonds (up) vs. AAA corporate debt (down).

For the full year, bonds rated CCC or lower have gained 7.1% while AAA debt has lost 5%. It's only the third time since 1996 low-rated debt has gained while top-rated paper lost value.

IG corporate ETFs: LQD, CBND, CORP, FLTR, FLRN, ITR, LWC, SCPB, VCIT, VCLT, VCSH, IGU, IGS, CSJ, QLTA, QLTB, BSCI, BSCJ, BSCK, BSCL, BSCM.

High-yield ETFs: HYG, JNK, PHB, HYLD, HYS, SJB, UJB, SJNK, ANGL, BSJG, BSJH, BSJI, QLTC, XOVR.

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Comments (2)
  • Tack
    , contributor
    Comments (16169) | Send Message
     
    Of course, this is exactly what happens in a strengthening economy with gradually rising rates. The high-yield bonds trade more like equities, and the low-yield issues are hurt by the convexity curve.
    4 Sep 2013, 09:25 AM Reply Like
  • GizmoA51
    , contributor
    Comments (116) | Send Message
     
    Since I am in HYLD and JNK I am not complaining!
    4 Sep 2013, 09:34 AM Reply Like
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