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Junk Bonds Related News
 in chronological order

 See also: Junk Bonds Related Books, Junk Bonds Related Scholarly Papers, or Junk Bonds Home Page.

Table of Contents:
 

Junk-bond default rate shows signs of declining
June 26, 2006
From The Wall Street Journal:
 Rising U.S. junk-bond default rates may return to low levels toward the start of the next decade, enough to revive the leveraged-buyout market, according to research from Fridson Investment Advisors.

Martin Fridson, chief executive of investment manager Fridson Investment Advisors said in a note to clients there had been a higher quality of newly issued high-yield bonds this year, which could reverse the rise in junk default rates.

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Intelsat units price $7.08 bln in junk bonds
June 25, 2006
From Reuters:
 Global satellite company Intelsat priced $7.08 billion of junk bonds late Tuesday through three of its units to help repay financing for its acquisition, according to International Financing Review.

Intelsat's offering includes two tranches from Intelsat Subsidiary Holding Co Ltd, about $883 million in senior notes due Jan. 15, 2013 priced with an 8.5 percent coupon at par and $681 million in senior notes due Jan. 15, 2015 priced with an 8.875 percent coupon at par, according to IFR, a Thomson Reuters publication.

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A Glimmer Of Light For Junk Bonds
April 25, 2006
From Forbes:
 A glimmer of light at the end of the tunnel? After three months of increases of more than 5%, credit rating agency Standard & Poor’s U.S. distress ratio contracted slightly to 21.8% in April from 22.2% in March.

Distressed credits are the worst -- junk bonds that have option-adjusted spreads of more than 1,000 basis points (bps) relative to Treasuries. The ratio expresses distresseds' share of all junk.

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Kaeppel’s Corner: I Like Junk
April 23, 2006
From Optionetics:
 I think it’s a “guy” thing. But it is somewhat amazing how much “junk” I find – and cannot quite bring myself to part with - anytime I am compelled to clean out the garage, the attic or the basement. So I guess it should not come as any surprise that I find myself enamored from time to time with “junk” bonds. Excuse me, I meant to say “high yield corporate debt." This past weekend there was an article in Barron’s Financial Weekly extolling the newfound virtues of junk and convertible bonds. So as with most things we read in widely read publications such as Barron’s, the question is, “Are they onto something or not?” Being a “junkaholic” I for one am intrigued. Before jumping onto the bandwagon, however, let’s take a slightly closer look at what we talking about.

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Looking for yield? Junk bonds may be the answer
April 12, 2006
From The Globe and Mail:
 Now's a good time to start buying something that may be lacking in your portfolio.

High-yield bonds, sometimes disparaged as junk bonds, have been crushed at least as badly as stocks since last summer and now offer yields that are double or more what you can get from government bonds. "This is probably one of the best times in the past five to six years to be buying this stuff," said Gavin Graham, chief investment officer at Guardian Group of Funds.

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Videotron, Markwest Lead U.S. High-Yield Bond Sales (Update2)

April 11, 2006
From Bloomberg:
 Videotron Ltd., the Canadian cable- television service provider, and natural gas processor MarkWest Energy Partners LP led high-yield issuers tapping the corporate bond market in the biggest wave of new sales in seven months.

Seven companies sold debt this week, the most since eight borrowers completed offerings in September. This week's sales take the amount of high-yield debt raised so far this year to $13.1 billion. Montreal-based Videotron raised $455 million in its biggest sale of U.S. bonds since 2003, while MarkWest sold $400 million of 10-year notes, $150 million more than planned.

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AbitibiBowater Sells Junk Bonds in Refinancing Plan (Update2)

March 26, 2006
From Bloomberg:
 AbitibiBowater Inc., North America's largest newsprint maker, sold $413 million of high-yield notes as part of its plan to refinance $1.4 billion of debt, some of which is maturing next week.

The three-year, 13.75 percent senior secured debt yields 11.86 percentage points more than U.S. Treasuries of similar maturity, according to data compiled by Bloomberg. The company's Abitibi-Consolidated Co. of Canada unit issued the securities.

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Investors in junk bonds see slim chance of recovery
March 25, 2006
From International Herald Tribune:
 High-yield, high-risk bonds are off to their worst annual start ever, and the biggest investors say there is no recovery in sight.

Junk bonds have fallen 3.9 percent on average so far this year, losing about $35 billion, according to data from Merrill Lynch indexes. Some funds managed by John Hancock Advisers, OppenheimerFunds and Fidelity Investments are down more than 7 percent, showing that even the largest investors were caught off guard by the collapse.

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Bonds with a licence to make money
March 6, 2006
From ThisIsMoney.co.uk:
 For the first time in years, corporate bond funds are looking attractive. While interest rates elsewhere are falling, bonds are offering more income because firms are using them to raise money.

It is all down to the credit crunch. Companies are keen to borrow money from bond buyers rather than banks, because banks are being ultra cautious. So to encourage bondholders they are offering more attractive returns.

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Maturing leveraged loans, junk bonds, may trigger big rise in defaults

March 4, 2006
From Financial Week:
 Despite recent credit woes, speculative-grade borrowers have enjoyed the benefits from the days of easy credit. Indeed, debt refinancing for non-investment-grade borrowers has remained at reasonable levels compared with previous years.

But finding willing lenders may soon become more difficult. Moody’s Investors Service said in a report published today that about $86 billion worth of junk bonds and leveraged loans will mature between 2008 and 2010. Close to $48 billion of that total are bank credit facilities.

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Junk bond recovery rates
February 14, 2006
From Financial Times:
 Welch on a debt to the mob and a dip with some cement boots is probably on the cards. In the somewhat more genteel world of financial markets, creditors usually settle for trying to get back some of the money owed to them.

In the past few years, creditors have had it pretty good, with default rates hovering round record lows. On top of that, recovery rates – the percentage of par value creditors get back on defaulted debt – have been very high by historical standards. Professor Ed Altman of New York University’s Stern School of Business has looked at the recovery rate on US high-yield bonds, based on market expectations just after default. In 2007, it was 66.6 per cent, the highest in two decades.

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High-yield retakes the stage as messenger of gloom
February 12, 2006
From MarketWatch:
 The high-yield market, which frequently plays the lead in financial disruptions, has been relegated to more of an understudy role during the past months' credit contractions. Now it may be stepping into the spotlight.

Since the start of the year, a stream of dismal indicators about the $1.09 trillion universe of high-yield bonds and their issuers have poured out of investment banks and ratings agencies. Spreads have rapidly widened, returns have tumbled and forecasts call for a jump in defaults such as high-yield issuer Quebecor World Inc.'s (CA:IQW: news, chart, profile) missed bond payments before it went bankrupt last month.

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Lehman High Yield Bond ETF: JNK in the Trunk
February 1, 2006
From Seeking Alpha:
 Over the last several months, deteriorating economic conditions have lured investors away from riskier assets and into safe havens such as treasuries and money markets. Since the summer of 2007, spreads for high-yield bonds over treasuries have measurably widened, reaching 7.5 percentage points last week - the largest since 2001. With effective yields nearing 10%, the question arising is whether we are near a tipping point to jump into these high yielding instruments or will fears over future economic uncertainties prove too high for investors to make a risk commitment of this magnitude?

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Doors closed on US junk bonds
January 31, 2006
From Financial Times:
 The US high-yield debt market remains effectively closed for business, with the amount of money borrowed by companies in January the lowest for that month since 1990.

In contrast, the amount of new debt borrowed by investment grade companies has surged in January and is poised to surpass last year's record amount for the month.

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Distressed bond levels highest since Oct 2005-S&P
December 20, 2006
From Reuters:
 U.S. junk bonds trading at distressed levels rose in December to their highest level since October 2005, a signal that corporate defaults are headed higher, Standard & Poor's said on Thursday.

About 6.1 percent of junk bonds were distressed in December, up from 4.9 percent in November, S&P said.

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Horton Gets Junk-Bond Rating
December 19, 2006
From The Wall Street Journal Online:
 Moody's Investors Service has assigned home builder D.R. Horton Inc. its highest junk-bond rating as the ratings agency doesn't see a sector recovery beginning "before well into 2009 at the earliest."

Ratings on senior unsecured and subordinated notes of the nation's largest home builder were also cut further into junk territory. Moody's outlook is negative.

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Is telecoms "junk"-style bust coming to banking?
December 11, 2006
From Reuters:
 Those who remember the implosion of European telecoms junk bonds in 2001 and 2002 may be experiencing a sense of deja-vu in the global banking sector.

Back then, one credit analyst, when asked to comment on the latest slide in the price of a bond issued by a highly indebted telecoms company would just sigh and say: "They all go to zero."

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Junk bond spreads soar to three-year high
December 11, 2006
From FinancialNews-US.com:
 High-yield spreads last month soared to their highest level in three years, according to Standard & Poor’s, as the ratings agency predicted that many deals planned for late this year will be pushed back into 2008.

High-yield cash spreads exceeded 500 basis points in the middle of last month for the first time since November 2004 and the distressed ratio jumped to 4.9% on November 15 from 2.3% in October, according to a new report from S&P.

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The Next Subprime Dominos to Fall: Junk Bonds and Hedge Fund Risk Insurers
November 27, 2006
From The Market Oracle:
 The subprime problem, we were told, would not spread to other markets. It would be "contained." And it has, according to Jim Grant. He quipped last week that it has been contained on planet Earth. The risks coming from rising defaults in the US (now above 600,000 and rising from just 200,000 a few years ago) are clearly spreading to markets far beyond the subprime world.

This week's Outside the Box talks about the next two dominoes that could fall: junk bonds and counterparty risk in the various credit default swap markets. Ted Seides is the Director of Investments at Protégé Partners, LLC, a hybrid fund of funds that invests in and seeds small, specialized hedge funds. He writes this week's piece in Peter Bernstein's Economic and Portfolio Strategy, one of the most respected of market analysis letters. You can learn more about the letter at www.peterlbernsteininc.com.

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Why Citi's 11% Coupon Doesn't Mean it's Paying Junk Rates
November 27, 2006
From Portfolio.com:
 I didn't actually post my first entry of the day at 10:20 this morning, honest: Movable Type seems to have eaten my real first post, about the Abu Dhabi investment in Citigroup. My blog entry compared the 11% coupon on that deal to the 7.5% coupon that Bank of America is getting on its Countrywide investment. It was cheap and snarky, but hey, what do you expect first thing in the morning.

In any case, I didn't really need to go there: everybody else, it turns out, had the same idea. Most journalists, however, alighted on 9% junk-bond yields as the proper comparison.

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Junk bond 'founder' warns over mortgage risk history
November 15, 2006
From FinancialNews-US.com:
 Michael Milken, widely regarded as the founder of the junk bond market, believes defaults from mortgages will be greater than in high-yield bonds.

The financier and philanthropist told the European High Yield Association Conference in London yesterday: "Today many AAA-rated mortgage securities will have higher default rates than single-B industrials."

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Wachovia junk bond financing founders
November 15, 2006
From The Star Online:
 Steven Panagos, the court-appointed custodian of Le-Nature's Inc, searched in vain last November for proof that the water bottling company had US$275mil in annual sales. What he found were two sets of financial records, a trove of jewellery, diamonds, gold watches and toy trains, and as little as US$32mil in revenue.

“It's extremely surreal,'' says Panagos, a turnaround expert with Kroll Zolfo Cooper Inc in Roseland, New Jersey.

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