The chart below shows the amount of corporate debt that trades at a price below 50 cents on the dollar. This is simply how JPMorgan defines "distressed debt". What's impressive is how demand for fixed income product nearly eliminated this spike in a matter of months. A year ago over $200 MM of corporate debt traded at discounts of 50% or more. Now there is almost none left.
Part of this exuberance in credit stems from falling default rates:
It's a bit of a self-fulfilling prophecy. Demand for fixed income product provides opportunities for refinancing, generating liquidity, extending maturites, and reducing default rates. Falling default rates generate more interest in credit/fixed income. Of course this process can work in reverse as well.