January 11, 2009 |
For bond funds, 2008 was spectacular. And disastrous. A 5.2% gain last year in a Barclays Capital index tracking the value of bonds of all kinds obscured the fact that performance in the fixed-income world was all over the map. Investors facing an unpredictable economy dumped corporate and municipal bonds -- as well as stocks -- in favor of the perceived safety of U.S. government securities, driving up their prices while driving down their yields.
November 13, 2008 |
Moody's Investors Service said it expected 10.4% of speculative grade debt, or "junk" bonds, would be defaulting a year from now. That is higher than the ratings agency's September forecast of a global default rate in late 2009 of 7.9%.
August 26, 2008 |
An appeals court Monday tossed out a $241-million award won by the state of California in a lawsuit stemming from the takeover of failed insurer Executive Life by French investors. The U.S. 9th Circuit Court of Appeals overturned the award by a lower-court judge and ordered a new trial to recalculate the damages that Artemis, one of the investors, should pay the state. The case stems from California's 1991 takeover of Executive Life Insurance Co. after it failed. The next year, the state insurance commissioner sold the company's junk-bond portfolio for $3.25 billion to an investor group that included the French bank Credit Lyonnais, which is controlled by the French government.
February 13, 2008 |
Stocks finished mostly higher Tuesday, led by the beaten-down financial service sector. The Dow Jones industrials rose more than 130 points. Meanwhile, yields on junk bonds rose to a five-year high. And prices of many commodities sank, slamming the brakes on record-setting rallies this month in raw materials.
December 20, 2007 |
Billions of dollars of municipal bonds insured by ACA Financial Guaranty Corp. were cut to "junk" status Wednesday after Standard & Poor's downgraded the insurer itself because of its exposure to losses on mortgage-backed debt. S&P slashed its rating on ACA Financial to CCC from A, which already was the lowest rating among bond insurers. S&P said ACA's capital cushion of $650 million was $2.2 billion short of what it needed to cover potential losses.
September 28, 2007 |
Investors in corporate junk bonds have recouped about half of their losses from the summer credit crunch. But some analysts warn that the plunge in high-risk bond prices in June, July and August could be a dress rehearsal for what the popular securities might face next year if the economy weakens substantially and more companies have trouble paying their debts. Defaults on junk bonds have been at two-decade lows, but virtually no one on Wall Street believes that can continue.
September 12, 2007 |
Bond defaults by companies with speculative-grade, or junk, credit ratings are likely to triple over the next year, Moody's Investors Service said Tuesday. The default rate is expected to climb from an estimated 1.4% of outstanding junk debt this year to 4.5% in 2008 and 5.6% in 2009, according to Moody's. The default rate probably would climb even higher if the economy were to go into recession, said Daniel Gates, Moody's chief credit officer for corporate finance in North America.
July 25, 2007 |
The private equity boom that has helped drive the 4 1/2 -year-old bull market in stocks is facing severe pressure as investors chastened by the sub-prime mortgage debacle balk at financing risky deals.
July 24, 2007 |
The cost of raising money in the junk bond market continued to surge Monday, spurring online travel firm Expedia Inc. to sharply scale back plans to borrow money to buy back stock. Also Monday, Allison Transmission, a General Motors Corp. unit that makes automatic transmissions for trucks and buses, postponed a sale of $3.5 billion of loans, said Leveraged Commentary & Data, a Standard & Poor's publication. The loans would have helped pay for the unit's $5.
July 21, 2007 |
U.S. junk bonds sold off sharply Friday as investors continued to pull back from high-risk securities. Analysts said renewed fears this week about a prolonged meltdown of mortgage-related bonds backed by sub-prime loans was triggering selling in the junk bond market as well. As prices fell, yields on junk bonds surged. The annualized yield on an index of 100 junk issues tracked by KDP Investment Advisors rocketed to a 12-month high of 8.12% from 8.02% on Thursday. The yield had been 7.