Corporate bonds in an ageing business cycle
Scavenging in the junkyard
IN THE 1970s the junk-bond market was a dark underworld. It was the home of “fallen angels”, the bonds of investment-grade firms that had gone to seed. Most investors were too genteel to hold them. So they traded at hefty discounts to face value. Then Michael Milken, a junk-bond guru, came along with a new gospel. A portfolio of high-yield junk was a better bet than one of supposedly safer bonds. After all, an A-rated bond can only go in one direction—down.
This article appeared in the Finance & economics section of the print edition under the headline “Scavenging in the junkyard”
Finance & economics December 1st 2018
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