Bonds issued by some of the companies hit hardest by coronavirus have rallied vigorously over the past year, rewarding investors who were prepared to gamble they would survive.
Cruise operator Carnival Corporation is, again, a prime example. One year ago, it pawned its ships to borrow $4bn from investors demanding an 11.5 per cent interest rate. Now the yield on those bonds has dropped to below 4 per cent as the bonds jump in value.
Carnival is still burning through $600m per month. The ships used as collateral for the bond deal are still docked while the company waits for a US ban on cruises to lift. But buyers of these bonds, and of debt issued by cinema chains and airlines, have made huge returns over the past 12 months as an economic recovery has taken root.