Traders Turn to Derivatives Amid a Debt Shortfall: Credit Weekly

Investors in US corporate bonds are earning so much money from their interest payments and reinvesting it so quickly that companies can’t keep up with the demand.

Blue-chip businesses have sold more than $1 trillion of bonds this year through August, data compiled by Bloomberg shows. Yet money managers have received even more than that in interest and principal payments, according to BNP Paribas — most of which they will pour back into the market.

The bank estimates that investors have about $74 billion more cash to reinvest than there have been bonds sold by companies. Without enough new notes ...