Bond investors are accepting the smallest compensation in years in return for taking default risk, as a potent combination of economic optimism and too much cash chasing too few securities skews costs.

Credit spreads - which measure the extra yield on riskier securities over those seen as safe, such as US Treasuries - are grinding lower across the world. That’s as muted financial volatility encourages investors to seek assets offering greater carry, ranging from company debt to emerging-market currencies.

The extra interest paid by investment-grade companies in US dollars is around the lowest level since before the dot-com bubble burst. The riskiest type of bank bonds have rarely been so expensive. A handful of borrowers are even trading at lower yields than Treasuries, flipping their sp

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