Yields on speculative-grade corporate debt in the U.S. dropped to an unprecedented 7.163 percent yesterday, breaking the previous record set more than 15 months ago.

Borrowing costs on the Bank of America Merrill Lynch U.S. High Yield Master II index have declined from 8.465 percent at the beginning of this year and a high of 22.651 percent in December 2008. Yields broke the previous record of 7.187 percent from May 19, 2011.

Yields are tumbling as issuers sell junk debt at the fastest pace on record as default rates remain below historic averages and the Federal Reserve pledges to keep borrowing costs low into 2014. Demand is intense enough to lead Bank of America Corp. analysts to say last month that prices were approaching "bubble levels."

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