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Yields are so low that even junk bonds now have negative rates

Allison Schrager
Yields are so low that even junk bonds now have negative rates

Historically, high-yielding corporate bonds in Europe offered a good return, but since the Great Recession of 2008, yields have been trending down to levels once only offered by highly rated government-issued bonds. The risk premium—the difference in yield between high-yield and risk-free yields—has fallen a bit in the last few months, but it has been fairly stable the last five years. To a large extent, the low rates simply reflect that the yields on risk-free assets have fallen and they took down the whole bond market with it.