High-yield bonds are heading back to junk

Yields on high-yield bonds have fallen so far in Europe that they are lower than the dividend yield available on equities.

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"Equities are the new high yield," says Ioannis Angelakis of Merrill Lynch. Yields on high-yield bonds (the riskier part of the debt market, often known as junk bonds) have fallen so far in Europe that they are lower than the dividend yield available on equities. And while US junk bond yields remain higher than dividend yields, the trend there has also been down. "Investors are getting the lowest yields on the riskiest bonds in almost three years, another sign of the high level of complacency in financial markets," says Jeff Cox on CNBC.

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James McAdam Stacey

James has previously written about financial markets for MoneyWeek. He has a bacherlors degree in management and he has been awarded an investment advice diploma by The Chartered Institute for Securities & Investment (The CISI). James then worked at Moran Stanley as a U.S. Equity Sales Analyst for two years, then moved into hedge fund sales and investor relations at 36 South Capital Advisors, and then became the Global Multi-Asset Sales at Credit Suisse. Now, James is the Associate Director of US Equity Sales at Oppenheimer & Co. Inc, where he is responsible for servicing a range of clients including asset managers, hedge funds and wealth managers.