Vanguard Points to ‘Opportunity’ in the Riskiest Corporate Bonds

Vanguard Group Inc. is hunting for bargains in the riskiest corner of the junk bond market at a time when the outlook for high-yield debt is relatively positive, according to the $11 trillion investment firm.

Vanguard is looking at bonds graded in the CCC tier, the lowest-rated securities that usually trade. While there are “pockets of opportunity” in the category, investors should evaluate these securities on a case-by-case basis as issuer quality varies significantly, Vanguard strategists wrote in a report released on Friday.

Businesses that generate relatively stable cash flows, like utilities and data centers, could be promising prospects, ...