In perusing the Vanguard list of available corporate bonds on the secondary market, I am perplexed by the interest rates offered. I know that there is much higher risk in buying corporate bonds than just continuing to purchase CDs, but it seems that the interest rates offered are oddly high. For example, I could buy an Alcoa bond of about 2 years duration and get around 6% interest for a couple of years. It seems to me that the likelihood of Alcoa being unable to make good on its bonds is extremely low. Clearly the market thinks otherwise. In other words, there seem to be many corporate bonds out there that look like screaming bargains. So what am I missing? We are a couple of years from retirement so can't take huge risks, but the money market rates are so low right now that it seems unwise to park 75% of our portfolio there.
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