For the past month, we have seen reports about negative yields for, of all instruments, junk bonds. How exactly did we get here?
We know about negative bond yields, but up to now it has been on government debt issuances and high-quality corporate bonds. There is a market narrative about those that at least offers a reason investors would buy them. Certain financial institutions – banks, pension funds and the like - are required to buy and hold "high-quality" assets like sovereign and investment grade debt.
But no one is forcing any investors to buy junk bonds. They are a purely voluntary choice when bought for a portfolio. That makes the logic of getting into such an investment seem even more crazy. So why does it happen?
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