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Corporate Bond Prices Approach Record

As investors pile in in search of yield, bonds sensitivity to rate changes jumps.

By John Glover, Bloomberg | Updated on April 25, 2013

Corporate bond prices worldwide are poised to set a record as easy money policies by central banks push investors into riskier investments even with the potential for losses at about an all-time high.

Bondholders are paying an average of 110.22 cents on the dollar for the right to receive 100 cents back at maturity plus the interest from coupon payments, according to Bank of America Merrill Lynch’s Global Corporate & High Yield Index. At the same time, the so-called effective duration that measures how sensitive bond prices are to changes in yield has jumped, making the securities about the riskiest to hold ever.

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