Junk bonds, debt issued by companies with shaky credit ratings, have become a hot investment.
Yields on junk bonds have dropped to record lows, according to Moody's, as investors pumped a weekly record of $1.4 billion into such debt, also known as high-yield bonds, during the week ending Feb. 9, according EPFR Global, which tracks the funds, USA Today reports.
U.S. investors have injected $16 billion into such funds over the last year.
The time to invest is now, because the rally won't last forever, experts say.
Improving corporate balance sheets mean that junk-bond yields could fall further, and the gap between junk and Treasurys could narrow, "but at some point, those spreads are going to be wider than they are today," says John Lonski, Moody's chief economist.
Wider spreads between Treasurys and junk imply that junk-bond yields will rise, and prices will fall.
|Fed Chair Ben Bernanke
The Federal Reserve has also played a role in pushing investors to junk bonds, as it buys up Treasurys held by banks via a $600 billion quantitative easing program.
Low interest rates also make riskier assets like junk bonds more attractive, especially during early economic recovery.
Others agree, however, that the rally may be ending soon.
"I would characterize the market as fully priced at the moment," Martin Fridson, global credit strategist at BNP Paribas Investment Partners, tells Daily Finance.
"It looks like the market has gotten a little ahead of itself, and we've had a very dramatic move during February."
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