Too big to fail Morgan Stanley, JPMorgan Chase & Co., and Bank of America Corp. are recommending junk bonds as Europe’s while as they say "sovereign-debt crisis flares and concern mounts over the strength of the U.S. recovery".
This despite the extra yield investors demand to hold U.S. junk bonds rather than government debt has declined 103 basis points this year to 620 basis points, spreads are still up from last year’s low of 452 on Feb. 21, 2011, Bank of America Merrill Lynch index data show.
Said one European investor: "you must either be out of your mind or totally stupid to believe these financial institutions, this looks like another big scam in the making".
EU-Digest