The current low interest enviroment has made very risky assets more attractive and S&P is worried that this could be the start of another market fall if the unsophisticated investors do not take the risk factors into account.
Investors are flocking into junk debt in Europe without exercising enough discipline, putting the market at risk of repeating past mistakes, Standard & Poor’s warned in a comment on Wednesday.
“Are memories in the capital markets getting shorter?” the S&P report asked. “The global markets have just experienced one of the worst liquidity and credit dislocations since the Great Depression.”
While banking chiefs and others are calling for discipline, the lack of returns in money markets and investment-grade bonds is steering new money into the high-yield bond market, S&P said
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