Homeowners aren't the only ones scrambling to take advantage of persistently low long-term interest rates - corporations in record numbers are exercising call options on their unsecured obligations in order to lock in low rates while the window to favorably refinance still exists. The result: high yield CBOs are paying down and performing at record levels, making investors that bought those bonds cheap experience a much greater profit than anticipated.

Standard & Poor's forecasts exercised call options to account for some $22.5 billion in maturities this year and $20.4 billion in 2006. The calls have allowed for huge paydowns, which have sometimes trickled all the way to upgrade even second-priority and mezzanine notes simply because of the excess overcollateralization. The ratio of upgrades to downgrades rose to 2.5-to-1 at the end of the second quarter, from 1.1-to-1 at the end of last year, according to S&P.

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