by Wolf Richter
Honeymoon already over? Bad breath of reality next?
If you bought the crappiest bonds on February 10, you’ve made a killing unless the company defaulted, in which case you got killed, and a lot of companies defaulted. But so much money poured into junk bonds that prices soared and yields plunged even for the riskiest near-default issues.
At the riskiest end, junk bonds rated CCC and lower, with D being default, the average yield, as per BofA Merrill Lynch High Yield index, plunged from over 21% on February 10 to 15% at the close yesterday. And bond prices skyrocketed. The BofA Merrill Lynch total return index for CCC and lower rated bonds soared 30% over the period: