Increased Junk Bond Activity in United States

Below - S&P U.S. High Yield Bond Indices track the performance of "junk bonds" in the United States. They have increased nearly 20% in 2016. 

How did the FED made this happen?
The FED's monetary policy has resulted in interest rates that are close to 0.

A Normal-Interest-Rate Economy

High-Yield Bonds - High Risk/High Return
High-Credit-Rating Bonds - Low Risk/Low Return

A Low-Interest-Rate Economy

High-Yield Bonds - High Risk/High Return
High-Credit-Rating Bonds - Low Risk/Lower Return

Investors typically seek the most return with a level of risk they can tolerate. When "safe" bonds offer little to no return, investment in alternatives increases.
Low interest rates create more junk bond investment. 

Why is this Bad?

​1. Lenders face a higher risk of default.
2. Companies that shouldn't be invested in receive more money.