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T. Rowe Sees Food Fight Over Newest Junk Bonds: Credit Markets

The value of new junk bonds is rising relative to outstanding debt.

By Lisa Abramowicz and Brooke Sutherland | Updated on August 06, 2012

Aug. 6 (Bloomberg) — The value of new junk bonds is rising by the most in at least three years relative to outstanding debt as low trading volume and faster cash inflows into mutual funds force investors to jockey for initial offerings.

New speculative-grade issues have outperformed Barclays Plc’s high-yield index by about 1.8 percent this year, more than in 2011 and 2010. Notes from Smithfield, Virginia-based Smithfield Foods Inc., the largest U.S. pork processor, rose 5.8 cents to 105.3 cents on the dollar since being sold July 18, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

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