Junk bonds are a good buy - if you can get your hands on them

HERE'S a quick way for credit investors to earn billions of dollars this year: simply buy pieces of the largest new junk bond sales, then sell them for a profit. It's been a seemingly easy formula of late.

Bonds issued recently by companies ranging from Valeant Pharmaceuticals International to Dollar Tree Inc have gained more in value than the US high-yield bond market on average. The only obstacle is winning the chance to purchase the new sales directly, and that can prove to be a significant hurdle, because the largest, most-active investment firms usually have first dibs.

For those lucky enough to get a seat at the table, the financial rewards have been hefty at a time of historically low bond yields around the world. Almost US$10 billion of bonds sold by drugmaker Valeant have increased in value by about US$345.5 million since their issuance last month, according to data compiled by Bloomberg and Trace, the industry's price-reporting system. The market value for US$3.25 billion of Dollar Tree notes sold in February have since risen by about US$180 million.