The search for yield is providing some much-needed liquidity for a small corner of a market that has yet to recover from the financial crisis: auction rate securities (ARS).

ARS are long-term debt instruments that are resold at regular auctions by banks with the aim of making them act like short-term securities. Until 2008, they were widely marketed, to individuals and corporations alike, as safe yet higher-yielding alternatives to cash. And they largely lived up to this billing, at least until credit markets seized up and Wall Street dealers stopped supporting auctions. That left investors stuck holding some $330 billion of securities that didn't mature for years (or, in the case of preferred stock ARS, never matured).

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