According to Standard & Poor's(S&P), corporate issuance of new bonds this year is likelyto exceed 2012 levels. Corporations around the world issued morethan $3 trillion in bonds from January through November 2013.

Much of the growth in borrowing is being driven by companiesthat are below investment grade. S&P expects global corporatespeculative-grade bond issuance—that is, issuance by companiesrated BB+ or lower—to account for more than 15 percent of the totalissuance this year. Not only that, but S&P projects that thisyear's corporate speculative-grade bond issuance will exceed $500billion, which would be a record.

“With relatively few alternatives to improve yield, investorswere eager to lend even to entities with lower credit quality,”says Diane Vazza, head of Standard & Poor's Global Fixed IncomeResearch. These investments appear to be fairly sound, even as morecompanies at the low end of the ratings spectrum were able to issuebonds. S&P reports that only 2.2 percent of speculative-gradecorporate borrowers defaulted from November 2012 through October2013, compared with 2.5 percent for all of 2012.