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High Yield Related News
 in chronological order

 See also: High Yield Related Books, High Yield Related Scholarly Papers, or High Yield Home Page.

Table of Contents:
 

Feltus sees great value in junk debt
September 22, 2008
From Reuters:
 U.S. high-yield bonds are great buys as spreads are trading at "ridiculous levels," Andrew Feltus, senior vice president and portfolio manager at Pioneer Investments, told the Reuters 2008 Restructuring Summit.

Feltus, who oversees about $8 billion in high-yield assets, said default rates of between 13 percent and 16 percent are "baked in the cake" for high-yield bonds. "The market is at very extreme valuations," Feltus said, adding securities are the cheapest ever.

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Why Buy High Yield Bond Funds?
September 15, 2008
From Seeking Alpha:
 I've been investing in high yield (more commonly known as junk) bonds for years, which has taught me a lot about their ups and downs. I hope this information can be used to give guidance for future investing.

History

In the 1980s, a few junk bonds were available on the NYSE and the over-the-counter market. Not only did they offer high yields, but brokerage commissions were modest. The high yields on junk bonds were necessary because their bond ratings were generally rated B or even CCC (BBB is the minimum rating for investment quality bonds). While the high yields were attractive, bumps in the road reinforced the idea that they also carried risk (i.e., bond defaults).

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FUND VIEW-Investec sees value in high-yield bonds
April 23, 2006
From Guardian.co.uk:
 Even though company defaults have yet to start in earnest, investors could profit by favouring high-yield bonds over government debt and stocks as historically they outperform when a recession gets under way, according to Investec Asset Management.

The fund manager, part of Investec Group says investment-grade corporate debt offers the best relative value in credit markets, but that returns on double-B and single-B-rated junk bonds are attractive relative to other assets, particularly versus equities.

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Merrill high-yield strategist Garman launches firm
April 21, 2006
From Reuters:
 Christopher Garman, the former head of high-yield strategy at Merrill Lynch (MER.N: Quote, Profile, Research), has launched an independent research firm, Garman Research.

Garman told Reuters on Monday that his research will not only focus on credit opportunities in high-yield and investment-grade markets, but various other asset classes, including bank and leveraged loans and public equity, as sectors have become ever more interlinked.

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Do High-Yield Junk Bonds Translate Into High Returns?
April 3, 2006
From WebCPA:
 There seems to be a very high correlation between the demand for high-yield (junk) bonds and the level of interest rates. The fall in Treasury bond rates during the second half of 2007 has once again led many investors to search for higher yields. In addition, the sub-prime crisis in residential mortgages of the summer of 2007, has led to a general flight to quality and all credit and liquidity spreads have widened. The combination of lower Treasury rates and wider credit spreads has increased the attractiveness of high-yield bonds for many investors. The question is: Does the high yield on junk bonds make them appropriate investments to consider as part of the fixed income portfolio. The place to begin to answer that question is to ask: What role should fixed income play in a portfolio?

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RLPC-UPDATE 1-Alltel may sell $2 bln high-yield bonds
April 3, 2006
From Reuters:
 Rural mobile service provider Alltel Corp will attempt to sell $2 billion in high-yield bonds next week, two traders told Reuters Loan Pricing Corp on Thursday.

The bonds are part of a $5.2 billion cash-pay bond offering that backs the company's leveraged buyout. They are expected to have a 13 percent coupon.

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Rating agencies dismiss junk verdict on bond insurers
March 14, 2006
From Reuters:
 For the market the evidence for judging bond insurers MBIA Inc. (MBI.N: Quote, Profile, Research) and Ambac Financial Group (ABK.N: Quote, Profile, Research) is clear and the junk bond verdict is in.

For credit rating companies, the deliberation goes on and on.

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UK's Abbot to test high yield bond market-source
March 13, 2006
From Reuters:
 British oil rig builder and operator Abbot Group is expected to launch a high yield bond in the coming months, a source familiar with the deal said on Thursday.

The issue could reopen the European high-yield corporate bond market which has been closed since July when global power generation firm InterGen had to raise yields twice to get its bond away due to volatile markets.

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Investors lured by $8 billion high-yield disaster bonds
February 26, 2006
From Reuters:
 Investors are flocking to insurance-risk bonds that offer high yield at relatively low risk in turbulent credit markets, bankers said on Monday.

The sale of disaster bonds by insurers, transferring the potentially crippling cost of earthquakes, hurricanes and floods to capital markets investors, beat the credit crunch to soar to some $8 billion (4 billion pounds) globally in 2007, nearly double the previous year's figure.

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Few positives for US high-yield bonds in the near term - S&P
February 25, 2006
From CNNMoney.com:
 Standard & Poor's (NYSE:MHP) Ratings Services said said there were few positives for the high-yield bond market in January and early February as investors and banks are still working out prices for the billions in backlogged debt.

With recessionary expectations revised upward and profits expected to trend downward, S&P said it sees little evidence to support high-yield bonds in the near term.

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NY professor sees junk bond defaults at 4.64 percent: report
February 6, 2006
From Reuters:
 A New York University professor is projecting that high-yield "junk" bonds will default at a rate of 4.64 percent this year, the highest since 2003, The Wall Street Journal reported on Wednesday.

Edward Altman, professor of finance at New York University, is due to announce his outlook in a report later in the day, it said.

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Negative pressures to continue for US high yield market - Fitch
February 5, 2006
From Forbes:
 Fitch Ratings said negative pressures will continue for the US leveraged loan and high yield markets at least through the early part of 2008.

The ratings agency said weak economic growth along with continuing difficulties in the housing and financial sectors will put upward pressure on risk premiums and stress on valuations.

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Investment banks face shrinking bond sales
January 8, 2006
From Crain's New York Business:
 Wall Street’s leading trade group has joined the chorus predicting tough times ahead for investment banks. It is forecasting double-digit percentage declines this year in the sales of most types of bonds.

The Securities Industry and Financial Markets Association projects that total bond issuance will decline by a whopping $600 billion, or 15% in 2008, to $3.4 trillion. That would represent the steepest such drop since 2004, when a momentary spike in interest rates chilled the market.

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Junk Bond Defaults to Rise Fivefold, Moody's Says (Update4)
January 8, 2006
From Bloomberg:
 The global default rate on high-yield, high-risk bonds will jump more than fivefold by the end of 2008, according to Moody's Investors Service.

The high-yield default rate will increase to 4.8 percent this year and reach 5 percent in 2009 because a weakening economy and ratings cuts will cause more issuers to miss their interest payments, Moody's analyst Kenneth Emery in New York said in a report released today. The default rate finished 2007 at a 26- year low of 0.9 percent.

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Innovative financing makes Michael Milken a success
December 26, 2006
From Ohio.com:
 I had the opportunity recently to catch up with legendary financier Michael Milken. For me, this was a chance to see my investing mentor, since I've spent most of my investment career in distressed securities.

Starting in 1969, Milken's central investment thesis was that many AAA-rated bonds would have a higher default rate than single B industrials. As an example, he would cite that AA-rated railroads defaulted at a higher rate than B-rated industrials from 1900 to 1970.

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Do High Yield Bonds Translate Into High Returns?
December 23, 2006
From Seeking Alpha:
 "Well-informed investors avoid the no-win consequences of high-yield fixed income investing." (David Swensen, Unconventional Success, p. 109)

There seems to be a very high correlation between the demand for high-yield (junk) bonds and the level of interest rates. The fall in Treasury bond rates during the second half of 2007 has once again led many investors to search for higher yields. In addition, the subprime crisis in residential mortgages of the summer of 2007, has led to a general flight to quality and all credit and liquidity spreads have widened. The combination of lower Treasury rates and wider credit spreads has increased the attractiveness of high-yield bonds for many investors. The question is: Does the high yield on junk bonds make them appropriate investments to consider as part of the fixed income portfolio. The place to begin to answer that question is to ask: What role should fixed income play in a portfolio?

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Defaults to Quadruple as More Companies Cut to Junk (Update2)
December 18, 2006
From Bloomberg:
 U.S. corporate defaults probably will quadruple next year after the number of companies that lost their investment-grade credit ratings rose at the fastest pace since 2003.

Moody's Investors Service predicts companies will default on 4.7 percent of their bonds in 2008 as the economy slows, up from 1 percent this year. Jones Apparel Group Inc., the Bristol, Pennsylvania-based maker of Nine West shoes, mortgage lender Residential Capital LLC and 31 other companies with a combined $52 billion of debt were downgraded to junk by Moody's this year.

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European high-yield default risk limited in 08 -UBS
December 18, 2006
From Reuters:
 Around two-thirds of European high-yield companies in the Crossover index do not need to refinance in 2008, which should limit the risk of corporate defaults over the next year, UBS credit strategists said.

Thirty-four of the 50 names in the Crossover index <ITCRS5EA=GFI>, made up mostly of speculative-grade companies, face no refinancing of public debt next year while 27 have nothing due in 2009 either, UBS credit strategists wrote in a note on Tuesday.

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Buffett buys $2B in TXU bonds
December 3, 2006
From FORTUNE:
 Warren Buffett put $2 billion of Berkshire Hathaway's cash to work at the end of last week when the company purchased high-yielding bonds issued by Dallas-based power producer TXU Corp., according to a person familiar with the deal.

TXU was bought earlier this year in a landmark $45 billion leveraged buyout led by Kohlberg Kravis Roberts. As with many LBOs carried out in buoyant markets, banks agreed to make large so-called bridge loans to help finance the deal, but they got stuck with those loans when demand dried up for LBO-related debt. TXU can now use the proceeds from the bond sale, whose total size was $3.9 billion, to help pay down the bridge loans. The bonds were issued through a subsidiary.

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Bonds: More risk can pad your yield
December 2, 2006
From The Arizona Republic:
 Talk about throwing the baby out with the bath water.

As the credit crunch lingers, many investors have fled to the safety of Treasury securities while giving a cold shoulder to just about everything else in the fixed-income world.

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Alltel units price $1 billion high-yield notes
November 19, 2006
From Reuters:
 Two Alltel Corp. subsidiaries late on Friday priced a $1 billion bond issue to help repay debt for the company's leveraged buyout, Alltel said on Monday.

Market sources had said on Friday that the deal was being postponed because of difficult market conditions. At least four junk bond sales have been pulled this month after massive mortgage-related losses at major banks took a toll on investors' risk appetite.

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