"A disorderly rotation out of bonds – characterized by higher interest rates and wider credit spreads – is the biggest risk for investment grade corporate bond investors this year," Hans Mikkelsen, credit strategist at BofA, said in a note to clients. "However, history offers little guidance about how much of an increase in interest rates would prompt such disorderly scenario and how it would play out."
Some indicators about this move, though, could be flashing now.
Stocks turned in their best January in 16 years to start 2013 and Treasury yields rose in unison. (Read More: Better Enjoy the Market Rally While You Can: Marc Faber)
The current 10-year yield at 2.02 percent does not meet Mikkelsen's criteria for what would trigger a "disorderly rotation" from investment grade corporates, but it is moving in that direction. The benchmark note began the year at 1.86 percent.
Mikkelsen estimates that a 2.5 percent yield would lead to what he would consider an orderly move out of the market, but a continued trek higher past 3.0 percent would be the game-changer.
BofA is not alone in its aversion to fixed income - Wells Fargo recently cautioned its clients about fixed income amid dangers from rising rates, and advised shifting 5 percent of their bond positions into stocks.
Because the corporate bond landscape has changed so much, history offers little guide about what could happen in a disorderly rotation. However, conditions in 1994 and 1999 are two periods that saw significant interest rate changes and corresponding outflows from the market.
Those cases saw investors pull about 10 percent of total assets out of corporate bonds. But even then, the parallels are different to draw primarily because of the different vehicles investors use to buy company debt.
In those days mutual funds were a bit player in the space, and exchange-traded funds even less.
But fixed income flows have surged and occupy huge parts of the fund industry, with $3.43 trillion in bond mutual funds, compared to nearly $6 trillion in equity funds.