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Junk Bonds

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BUSINESS
By WERNER RENBERG | February 9, 1992
If your desire for high investment income has led you to consider high current yield (or "junk") bond funds but your concern about their riskiness has led you to drop the idea, you may want to take another look.High-yield bond funds typically invest in corporate bonds that are regarded as "below investment grade." They are so labeled because analysts question whether their issuers will be able to pay interest and repay principal as scheduled.Such bonds appeal to some investors, who can afford the risk of investing in them, because their yields exceed those of higher quality corporate and government bonds.
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BUSINESS
By JAY HANCOCK and JAY HANCOCK,jay.hancock@baltsun.com | January 14, 2009
Somebody has to finance America. Mark J. Vaselkiv is doing it. As banks do little with bailout cash except pay executive salaries or lend it back to the government by buying Treasury bills, Vaselkiv aims capital at the stressed and unloved companies that are the only things between us and a depression. He manages T. Rowe Price's $4.3 billion High Yield Fund, which invests in "junk" bonds and other risky debt. Once an exotic, niche investment, high-yield credit has come to dominate U.S. finance as the number of junk issuers has surpassed "investment grade" corporations in recent years.
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BUSINESS
By Andrew Leckey and Andrew Leckey,1987 Tribune Media Services, Inc. 435 N. Michigan Ave., Chicago, Ill. 606ll | March 27, 1991
The junk bond market is back with a vengeance in 1991. After a miserable 1990 and talk of that market's imminent demise, junk bond issues have averaged a strong 16 percent gain this year.Providing the push is optimism that the recession will end with a whimper, and that companies that have somehow managed to struggle this far will continue onward and upward.Even a default rate among these low-grade issues that's expected to equal last year's hefty 9 percent figure isn't scaring off risk-oriented investors.
BUSINESS
By Andrew Leckey and Andrew Leckey,Chicago Tribune | September 28, 2008
Investors who survived the 1987 stock market crash, the late 1980s savings-and-loan debacle and the 1990s technology bubble may well retain some confidence that the financial system can somehow right itself again. What remains to be seen is how quickly the government runs through bailout money, whether subsequent requests follow and what the ultimate bill will be for taxpayers. Despite the move to investment quality, the government bailout may offer renewed hope for high-yield funds. That's because the bailout should accelerate recovery and reduce the likelihood of widespread bond default for those instruments.
BUSINESS
By Barbara Demick and Barbara Demick,Knight-Ridder News Service | March 21, 1993
NEW YORK -- Fed up with the pitiful rates on certificates of deposit? Tired of Treasuries?Ever thought about junk bonds?If you haven't, well, lots of people have. Yes, respectable, middle-class Americans -- the kinds of people who drive station wagons, live in suburbia and are similarly sensible in their investing habits.Junk bonds are making a surprisingly strong showing in today's economy. The low interest rates offered on higher-grade corporate bonds, Treasuries and deposit accounts have prompted investors to take another look at that most vilified investment of the 1980s.
BUSINESS
By Jerry Morgan and Jerry Morgan,NEWSDAY | December 15, 1996
The quality of junk is less strained, and that means more stable returns for those who invest in high-yield bond mutual funds."This has been a spectacular year for high-yield bonds," said Diane Vazza, director of fixed-income research for Standard & Poor's."
BUSINESS
By Andrew Leckey | September 12, 1990
Nobody loves you when you're down and out. In 1990, nobody loves the battered junk bond market.The high-yield game, as this column has frequently pointed out, is always risky. Even in the best of times, only a modest speculative portion of one's investment portfolio should ever be committed to it. But, even with that caveat in mind, this year qualifies as downright scary.Thirty-two high-yield bond issuers have defaulted, a hefty 5.8 percent annualized default rate. Bond issues of recession-prone industries such as casinos, building materials and retailers have been hardest hit. There's fear that a combination of weak economy and high oil prices by year-end could push the market to its highest default rate in two decades.
BUSINESS
By Bill Atkinson | August 12, 1996
THE LAST PLACE anyone might think of as a safe haven for their money is the junk bond market.Remember junk bonds? They were the securities embraced by Michael Milken, who used them to finance scores of corporate takeovers in the 1980s. They ended up crippling companies under crushing debt and forcing layoffs and failures.But stack up the performance of junk bonds against corporate bonds and the results are eye-opening. Junk bonds, also known as high-yield bonds, have consistently beaten corporate bond funds on an annualized basis over the past 10 years.
BUSINESS
By NEW YORK TIMES | December 17, 1995
Junk bonds can seem risky even in the best of times. With the economy slowing and junk bond defaults on the rise, now may seem a time of particular risk.But bonds whose credit quality puts them below investment grade -- hence the name junk -- can be useful in many a portfolio. Recent figures compiled by Oppenheimer Management indicate that junk bonds have done a good job of balancing risk and reward over a long period.Part of the reason is that they are hybrid securities. Often issued by companies with heavy debt or other financial strains, junk bonds carry a higher yield to compensate investors for the risk that the issuer will not be able to repay its debt.
BUSINESS
By Graeme Browning | December 15, 1990
NVR L.P., one of the top two homebuilders in metropolitan Baltimore, announced yesterday that it will not make approximately $14 million in interest payments due today on its "junk" bonds.The McLean, Va.-based company, which builds housing locally under the names NV Homes and Ryan Homes, said in a statement that it does not expect to pay any further interest on its $220 million worth of junk bonds until a financial restructuring plan announced earlier is completed.Junk bonds, high-yield debt instruments, have fallen out of investor favor after being used by many companies to raise capital during the 1980s.
BUSINESS
By Andrew Leckey and Andrew Leckey,TRIBUNE MEDIA SERVICES | October 28, 2007
Investor money is flowing into junk, or high-yield, bond mutual funds. These bonds were punished by the subprime-lending crisis this summer, but investors have since been lured back by their returns. "We say it isn't politically correct to call them junk bonds anymore," said Andrew Feltus, manager of Pioneer High Yield Fund and Pioneer Global High Yield Fund, two of the top-performing high-yield funds. His $4 billion Pioneer High Yield "A" (TAHYX) has a 12-month return of 13 percent and three-year annualized return of 9 percent.
BUSINESS
By Evelyn Iritani and Evelyn Iritani,Los Angeles TImes | April 27, 2007
LOS ANGELES -- Welcome to Michael Milken's living room: a fire marshal's nightmare crammed full of people who have money or power, want money or power, or are willing to pay several thousand dollars to be near any and all of the above. At least 3,000 people were packed into this week's high-powered salon, which is not being held in Milken's Encino home (too small), but at his longtime haunt, the Beverly Hilton. They had come to hobnob with the junk-bond-king-turned-philanthropist and hear the musings of his marquee friends, people with names like Murdoch, Pickens, Turner and Broad (as in Rupert, T. Boone, Ted and Eli)
BUSINESS
By Suzanne Cosgrove and Suzanne Cosgrove,Chicago Tribune | March 11, 2007
Low U.S. interest rates have been a boon for the junk bond market in the past few years, allowing companies to take on new debt at a rapid clip. What that has meant for investors and the outlook for junk bonds going forward is less certain. While many investors have been fixated by the stock market's gyrations, others are taking a hard look at the bond market, including junk bonds. Last year, corporate debt issuance advanced at the fastest pace in five years, "as new issuance turned increasingly aggressive, moving away from refinancing," according to a recent report by Fitch Ratings Inc. Against the backdrop of a stable economy and a Federal Reserve that has stayed the course on interest rates since June, defaults on debt - failure to make timely payments of principal and interest - have been at historically low levels, analysts say. In a recent research report, Fitch said the U.S. high-yield default rate ended 2006 at 0.8 percent, down from 3.1 percent in 2005 and well below a long-term average rate of 5 percent.
BUSINESS
By Tom Petruno and Tom Petruno,Los Angeles Times | December 26, 2006
Oil didn't get to $100 a barrel, General Motors Corp. didn't file for bankruptcy protection and 9,000 hedge funds couldn't do enough dumb things to bring down the financial system. Oh, and there was no bird-flu pandemic, no devastating Atlantic hurricane, and no Federal Reserve interest-rate jump in the second half of the year. The list of this year's financial market highlights is dominated by what didn't happen. The non-occurrences helped give Wall Street the confidence it needed to power ahead in 2006.
BUSINESS
By GAIL MARKSJARVIS and GAIL MARKSJARVIS,CHICAGO TRIBUNE | November 27, 2005
Sometimes it pays to be a coward. And for bond investors, this seems like one of those times. Many bond strategists are warning investors to stay away from high-yield bond funds. During the last three years high-yield, or "junk," bonds gave investors the income jolt they needed while interest rates were unusually low. But now strategists claim there is no need to take chances. Safer bonds are providing more than twice the yield of two years ago, and high-yield bonds aren't offering enough to make the risk worthwhile in a potentially volatile economy that could see increased defaults.
BUSINESS
By BILL BARNHART and BILL BARNHART,CHICAGO TRIBUNE | July 31, 2005
When bond rating agencies downgraded General Motors in May, the world's largest automaker joined an exclusive club, or rogues' gallery, if you prefer. In recent years, a number of other household-name companies - Xerox, AT&T, Eastman Kodak, Maytag, Enron, Tyco, Lucent, WorldCom, RJR - saw their debt drop from investment grade to speculative grade, or "high yield" securities. They became fallen angels, in the parlance of the bond market. In some cases, notably WorldCom and Enron, fallen angels slid into default and bankruptcy proceedings.
BUSINESS
By Bloomberg Business News | January 2, 1993
NEW YORK -- Junk bonds offered the highest returns in the corporate bond market last year and are poised to remain No. 1 in 1993, analysts said.High-yield, high-risk junk bonds "offer the best returns" into 1993, said Jennifer Leichter, manager of Putnam Diversified Income Trust which has $406 million in assets. That's partly because junk probably will get a boost from a rebounding economy while still paying interest rates often several percentage points above investment-grade securities.
BUSINESS
By Andrew Leckey and Andrew Leckey,TRIBUNE MEDIA SERVICES | October 28, 2007
Investor money is flowing into junk, or high-yield, bond mutual funds. These bonds were punished by the subprime-lending crisis this summer, but investors have since been lured back by their returns. "We say it isn't politically correct to call them junk bonds anymore," said Andrew Feltus, manager of Pioneer High Yield Fund and Pioneer Global High Yield Fund, two of the top-performing high-yield funds. His $4 billion Pioneer High Yield "A" (TAHYX) has a 12-month return of 13 percent and three-year annualized return of 9 percent.
NEWS
By KNIGHT RIDDER/TRIBUNE | May 6, 2005
DETROIT - General Motors Corp. and Ford Motor Co. fell into junk-bond status yesterday for the first time in either company's history, as the nation's leading credit-rating agency said the combination of plunging SUV sales and rising health care costs made it nervous about the automakers' futures. Though widely expected, the decision by Standard & Poor's Corp. to downgrade both automakers is a historic marker on Detroit's bumpy road as U.S. automakers are losing market share at home to Asian companies such as Toyota and Honda.
NEWS
By Kimberly A.C. Wilson and Kimberly A.C. Wilson,SUN STAFF | October 18, 2004
After sparring long-distance in a dozen separate television ads, U.S. Sen. Barbara A. Mikulski, a Baltimore Democrat, and her Republican challenger, state Sen. E.J. Pipkin, will meet tonight in a televised debate. Mikulski and Pipkin have been embroiled in an increasingly volatile exchange of campaign commercials. Pipkin, a first-term state legislator from the Eastern Shore, has accused the 28-year veteran of Capitol Hill of being out of touch with Marylanders and casting more than 350 votes to raise taxes during her career.
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