Corporate debt has grown almost 30% to $7.4 trillion since the real estate and high-tech markets crashed. The reason behind this circumstance: low interest rates. One crack in servicing corporate debt is the downgrades of bond quality, especially evident in the energy and commodities sectors. Consequently, the market for junk bonds is doing well, albeit at lower prices.
Junk bonds are risky and more sensitive to the economy’s growth. On average junk bond funds were down -3.7% last year and have edged down -0.36% year-to-date. Meanwhile and until interest rates return to normal, many investors focus on instruments like exchange-traded funds (ETFs) that already make for a $3 trillion global industry.
In latest company news, Citigroup Inc (C) awaits earnings on April 15 before the bell. Shares of the banking services company are down about -2.5% to $41.51 on the month by April 5. Consolidation now finds the company in the fifth and last quarter of its $7.8 billion stock buyback program to boost dividends. Wall Street expects earnings of $1.13 per share on revenue of $17.7 billion.