Advisors generally like bonds because they’re “safe” – but here’s one bond market that’s looking pretty risky: 

Corporate bonds.

Investors are sinking trillions of dollars into buying corporations’ debt – and they’re investing for the lo-o-ong term.

Two examples:

• Norfolk Southern Corp. must pay off $400 million worth of bonds to investors – 100 years from now.
• Johnson & Johnson will pay back $4.4 billion worth of debt at just 0.7% interest – quite a deal considering the core inflation rate is over 3%.

Some financial experts are steering their clients clear of corporate bonds altogether, largely because they see inflation going up for the forseeable future.

As Barclays Capital points out, the yield for corporate bonds is below 4%, for the second time in two decades. So bondholders will lose money by the time their bonds mature – not such a great investment.

What’s your take on corporate bonds? Share your opinion below.

Tags: bond market, bonds, corporate bonds, corporate debt, johnson & johnson, norfolk southern corp.