Investors are rating junk bonds that are sold by companies in Europe, safer than banks' riskiest debt for the first time on worries that lenders will lose money in the midst of the region's sovereign deficit problems.

The extra yield buyer's demand for owning high-yield non- financial notes instead of government securities went down below that on bank subordinated debt on Jan. 6, and is now twenty nine basis points lower, as reported by Bank of America Merrill Lynch index data.

Before the month of November, speculative-grade bond spreads had never been seen within one hundred basis points of those on bank notes, which on an average are rated eight steps higher.

The Basel Committee on Banking Supervision announced rules on Jan. 13 that would subject banks' subordinated bonds to absorb losses, meant to protect taxpayers and help lenders avert collapse. The lowest-rated non- financial companies are proving more resistant to concern cropping up from euro-region nations' mounting debt that has roiled world markets for a year.

Lucette Yvernault , one of the money managers working at Schroders Investment Management Ltd. in London, which monitors as many as one hundred and eighty one million an fifty thousand pounds stated that High-yield is a great story and the lenders are still disturbed by the sovereign uneasiness on one hand and the lack of regulatory support on the other.

Relative yields on speculative-grade European company debt lowered by fifty one points to reach a three-year low of four hundred and thirty seven after Oct. 31, a month prior to Ireland asking for an eighty five billion-euro bailout, as per Bank of America Merrill Lynch's Euro Non-Financial High-Yield Constrained Index.

Subordinated bank bond spreads gained one hundred and twenty five basis points in the same period to hit four hundred and sixty six approaching the highest since July, as shown by the EMU Financial Corporate Index.