With a recession – by common consensus – looming, would anyone in their right mind allocate fresh capital to junk bonds? After all, by definition, they are the fixed income securities most likely to default. As the current crisis plays out, companies with weak balance sheets are most likely to be weeded out.

Indeed, with yields in sub-investment grade corporate bonds running at more than 16 per cent last week, a full 1,360 basis points above Treasury yields (compared with just 590 basis points above Treasuries at the start of the year), the risks would seem perilous. Whereas a month ago predicted default rates on high yield bonds were 6-7 per cent, according to a consensus of analysts, Standard & Poor’s, the ratings agency, is now forecasting that 12 per cent of junk bonds will default over the next two years.