US corporate bonds - yield of dreams Are Microsoft's bonds a safer investment than Uncle Sam's? How about ExxonMobil's? With Barack Obama's re-election leaving an unobstructed view to the fiscal cliff and at least four years of divided government, the question is pressing. A few corporate bonds from US companies appear to be at lower yields than comparable Treasuries. The crisis in Europe sent yields on bonds from Repsol and Enel below those of Spain and Italy. Emerging market companies have often been seen as more creditworthy than their home countries. "Negative spreads" for corporate debt have appeared occasionally in the US, too. Now, as in earlier cases, bond mavens dismiss the inversion as an illusion created by the difficulty in finding perfect maturity comparisons between the two types of bond. Yet the fact remains that the financial prospects of some US companies look better than the US government's, at least on first blush. Since the financial crisis, many large companies have hoarded cash while the government has loaded up with debt. Unlike the government, global companies can look outside the US for growth. And, after Standard & Poor's stripped the US of its triple-A credit rating, the US has a lower rating than some of the country's blue chips. Further downgrades loom if political gridlock paralyses fiscal policy making. Nor is the fiscal cliff the only danger. The US will have to raise its debt ceiling early in 2013. On the other hand, Uncle Sam has strengths that no company can match. There is of course the ability to raise taxes and print money; the status of the dollar as the reserve currency; and unparalleled government bond liquidity. Even if Microsoft is healthier than the US, its 10-year bonds trade nowhere near as freely as 10-year Treasuries. The liquidity of the corporate bond market has in fact fallen since the financial crisis, as the number of bond dealers has shrunk and regulations on them have increased. In an uncertain world, the ability to trade - that is, to sell - easily has tremendous value.