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.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including and

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.