You're missing the point, which is that in the search for yield, investors are mispricing risk. I would venture a guess that the vast majority of people who own

You're missing the point, which is that in the search for yield, investors are mispricing risk. I would venture a guess that the vast majority of people who own a note tied to the loan of the aforementioned borrower either couldn't tell you what a similar borrower would have paid for the same loan in, say, 2005, or they don't care what a similar borrower would have paid for the same loan historically. They care more about the current interest rate in relation to other yield-producing instruments than they do about the actual risk they're buying and how that risk has historically been priced. One additional thing to note: there are tons of investors (retail and institutional) snapping up junk in this market, but there are also many savvy people in the debt markets who are playing it cool because they know that you make money by pricing risk appropriately, not by buying the instrument with the most appealing yield.