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4. «Zombie» Bonds
With yields on government bonds persistently low, investors are flooding into corporate debt instead. This is tanking prices and wiping out risk premiums – and propping up «zombie» firms, according to IC-V senior partner Rene Hermann. «Certain companies wouldn’t exist anymore if it wasn’t for these really low interest rates,» Hermann said recently.
This isn’t just a U.S. phenomenon: Swiss food firm Hochdorf and tech company Kudelski were both lucky to get credit extensions from their banks recently – they can thank generous monetary policy for the breather.
