Investment-grade bond yields plunged to the lowest since atleast October 1986 yesterday as the Federal Reserve pledges to holdinterest rates near zero percent through at least late 2014 andinvestors seek safer assets.

The yield on Bank of America Merrill Lynch's U.S. CorporateMaster index fell to 3.44 percent yesterday, passing the previouslow of 3.45 percent reached in August. That's lower than the 3.5percent the U.S. government's 10-year Treasury yielded as recentlyas April, before falling to 1.90 percent.

Borrowers from Walt Disney Co. to International BusinessMachines Corp. are taking advantage of coupons at all-time lows asinvestors seek a haven from Europe's sovereign-debt turmoil,driving down Treasury yields. At the same time, the Fed's lowinterest-rate policy is forcing buyers to take extra credit risk asthey seek higher returns, increasing demand for suchsecurities.

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