Analysis / Corporate bonds are fool's gold
The froth in the corporate bond market in the U.S. and parts of Western Europe is due to the lack of investment alternatives and is causing investors to fail to accurately price risk.
Vast sums of money have been pouring into the corporate bond market for months. Not in Israel, of course. Over here, the tide's been flowing in the opposite direction. The sudden adoration for corporate debt is mainly in the United States and parts of Western Europe – regions where returns on long-term corporate bonds have dropped to all-time lows.