Bankruptcy

Junk Bonds Healthy???

By J. Michael McBride

Fridson Investment Advisors was founded by Martin Fridson who says, “that new issues of junk bonds are healthier and more default-resistant than in recent years. This shift in what has been a challenged market is happening because weaker borrowers are being shut out, in Mr. Fridson’s estimation. With fewer really risky borrowers able to sell debt, the default rate will decrease after the current toxic debt left over from the leveraged buyout boom clears out after two years”.

“This shift in what has been a challenged market is happening because weaker borrowers are being shut out, in Mr. Fridson’s estimation. With fewer really risky borrowers able to sell debt, the default rate will decrease after the current toxic debt left over from the leveraged buyout boom clears out after two years”. The S&P reported on Wednesday that “as of mid May, corporate borrowers had defaulted on almost $19 billion of debt-more than double last year’s total.”

.......

“... statistics from Advantage Data show that default rates on speculative-grade debt will decline after in the next two years. He concludes that this is because there will be fewer debt issues rated below BB-minus, which is the higher end of the speculative spectrum. The addendum is that any company that will default on its debt likely will do so within three to four years of a buyout or big debt sale.”

Here is the link to the full article:
http://blogs.wsj.com/deals/2008/06/26/breaking-news-from-2010-junk-bond-default-rates-fall/?mod=hpp_europe_blogs

Michelle

Full post as published by Texas Lawyer Blog on June 27, 2008 (boomark / email).