“As they stampede out of stocks, investors seeking safer havens are pouring money into corporate bonds. During February, according to AMG Data Services, corporate bond funds received $10.5 billion in new money from investors, while equity funds experienced redemptions of $9 billion, both record amounts for the month,” writes Gretchen Morgenson in Sunday’s New York Times.

“But investors who hope that their retreat to bondville will reduce risk in their battered portfolios could be dead wrong. So many companies have amassed so much debt in recent years that they are more vulnerable to instant downgrades when a problem erupts. Investors who held the debt of Royal Ahold found that out the hard way last week, when its debt rating was cut to junk status after the company disclosed that its earnings had been inflated by $500 million.”

” ‘Corporate bonds are more risky than ever,’ said Carol Levenson, director of research at Gimme Credit, an independent research service that analyzes high-grade corporate bonds for institutional investors. ‘The general level of credit quality is going down, and there are land mines everywhere. But until the stock market starts to worry about it, companies aren’t going to worry about it.’ “

“Last year, Gimme Credit spotted corporate debacles at UAL, parent of United Airlines, and at WorldCom, Tyco International, Corning, Kmart and Qwest Communications well before they happened. But the firm’s record is not a result of any special tricks, Ms. Levenson said: ‘We look at the same numbers everybody else looks at. It’s just surprising how having no conflict of interest improves your batting average, not to mention the freedom of always being able to say what you want to say.’ “

“Analysts at Gimme Credit do not own the bonds of companies they rate, and the firm does no investment banking and never cozies up to corporate management. In fact, Ms. Levenson and her colleague Kathleen Shanley rarely speak to executives at the companies they follow. ‘It is not our responsibility to be the pep band for these people,’ Ms. Shanley said.”

“Unfortunately, Gimme Credit’s annual fees of $18,000 are too expensive for most individual investors. But last Friday, Ms. Levenson and Ms. Shanley listed five companies whose bonds may be hurt by deteriorating business or a ratings downgrade: Alcoa; Kroger; MBNA; Sears, Roebuck; and Unum Provident.