![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiWzutbfvO36mapWGTTJteLS-87YKBma0JUHffUjpHuLmdgaif-a24oFCitM4Jb-OTTzfEYEOwvOOQ30lBjNGVF2pCISWj4eb8xL5QkEsZ4dUcV9zDooQYEf-uRipc3ntnBRM9g43Vo4rA/s400/distressed+debt+decline.gif)
Part of this exuberance in credit stems from falling default rates:
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhpn-zApMMq03pilySTUnNPNBasipbDdDSJ6xojGw14pi2nMUDu9hbeIBYPUzn40gXCaMhMblRZzvrCWXNhKySkTDT3kxseSxQ4GFWsWq8W6gG1Q1L7Zyw2b4fND8LUfdBbuKnom0e7Qfg/s400/pace+of+defaults.gif)
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.
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