Demand for high yield debt surges

High yield or ‘junk' bonds have seen a surge of investor interest, pushing prices to the levels seen before the credit crunch.

Last week, the Bank of America Merrill Lynch index, which is commonly used to trade in the high yield market, rose and took the average price of junk bonds to more than 100 cents on the dollar. This is the first time prices have reached this peak since plummeting to 55 cents in December 2008. This week, high yield bond prices remained above the 100 cents mark. Andrew Lake, the head of high yield portfolio management at Aviva Investors, says the European high yield market is trading on an average price of 94, but with a lower yield than in the US. He says the main reason for the sud...