State Street Corp., manager of the second-biggest exchange-traded fund that invests in junk bonds, is beating larger rival BlackRock Inc. by buying riskier debt that’s outperforming the safest by the most since 2009.
Junk bonds of health-care providers are beating the high-yield market after underperforming in the first five months of the year, as a U.S. Supreme Court ruling boosts investors’ optimism for the industry.
Leveraged loans are generating their biggest losses of the year as investors pull back from even the safest debt in a company’s capital structure on concern that Europe’s financial crisis will spark a global slowdown that diminishes the creditworthiness of borrowers.
The riskiest part of the global corporate bond market is driving relative yields on company debt to the widest levels in more than three months as speculation mounts that the economic recovery is faltering.
Junk bonds are beating stocks by the most since September, with speculative-grade debt building on last month’s gains while losses deepen in equities, as investors seek a haven amid signs the economic recovery is slowing.