Wall Street Promotes Junk Bonds as Europe's Crisis Erupts

Morgan Stanley (MS), JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) are recommending junk bonds as Europe’s sovereign-debt crisis flares and concern mounts over the strength of the U.S. recovery. Morgan Stanley said last week that U.S. high-yield obligations were in a “sweet spot” as borrowers cut their debt loads. JPMorgan said junk yields will fall more than half a percentage point by year-end. Bank of America favors debentures rated in the middle tier of speculative grade.