As high-yield bond trading activity has one of its best years ever, investors are looking for and finding solid investments in that arena, a Citigroup banker told CNBC Tuesday.
The issuance of high-yield bonds, also known as junk bonds, was the highest ever last week.
“We’re really seeing a flight to quality in the high-yield market because the only risk of default that exists in high-yield is at the lower, in the CCCs, and in a lot of those over-levered LBOs (leveraged buyouts),” said John Fenn, head of credit analysis at Citi . He has been with the bank for seven years.
Fenn said that investors are flocking to high-yield bonds because of robust returns and lower risk.