From Tricolor to Saks, Bonds Are Now Crashing at Breakneck Speed

It is, by almost any measure, a golden era for US credit markets. Companies are selling debt at a near record clip; relative borrowing costs are hovering around historic lows; and investors are pocketing the best returns in years.

But in recent months, a flurry of meltdowns — each of which inflicted losses of more than 60% on investors — has exposed cracks in that edifice.

It began back in the spring with the luxury retailer Saks. Things went bad so fast, it restructured its bonds after making just a single interest payment. Days later, another bond — this one ...