Despite Record Rally, JP Morgan Says Junk Bonds Still Cheap

By Bryan Keogh

Oct. 19 (Bloomberg) -- High-yield, high-risk company debt is still cheap even after this year’s record 50 percent rally, according to Wall Street’s top-ranked junk-bond strategists.

Job losses will slow in “coming months,” while housing activity accelerates and consumer sentiment begins to improve, causing yields on junk bonds to narrow further relative to benchmark rates, JPMorgan Chase & Co. strategists led by Peter Acciavatti wrote in an Oct. 16 report. Growth this quarter along with zero percent interest rates and diminished default risk offer investors “plenty of incentive” to buy the debt, they wrote.

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