These deals could snuff out rallies whenever the market tries to gain momentum. New issues aren't the only source of additional supply. But that forecast looks conservative. Indeed, U.S. companies have become so leveraged with debt that investors may demand a yield premium on all corporate bonds. If so, junk bond yields may never fall back to their old averages.
Analysts say cable and telecommunications are the sectors to watch.
Strong's Koch, for example, has loaded up on cable TV companies that have already upgraded their networks and have strong cash flows. He considers them a safe bet in an uncertain economy, because people will cut back on other expenditures before they'll risk losing their connection. Takeover plays are also on investors' radar screens. In truth, just about everybody advises individual investors not to try picking bonds themselves. The main trick, of course, is to make sure a company has the wherewithal to cover its debt payments.