But by pushing rates down everywhere, he has driven investors looking for extra yield to the riskiest paper and allowed them to lever up these bets cheaply. The $2 trillion he has pumped into the economy and his zero interest rate policy may have spared us a second Depression. The sickly Bs are expensive now, with prices up 43% so far this year.Īs for why risky assets are in vogue, look to Fed Chief Ben S. "There's such a desperation for yield now, you have to wonder if people have learned any lessons" from the crash, says Berwyn Income comanager George Cipolloni, who has loaded up on junk but shunned lower rated issues. Suddenly flush, bond managers are scrambling to find somewhere, anywhere, to put their money to work. Why? Forget the business and follow the money, specifically the net $20 billion that has flowed into junk bond funds this year. 17 that it was able to sell $675 million, nearly double what it had planned. So why are investors lapping up its bonds? Despite plunging same-store sales and liquidity troubles this summer that stoked rumors of bankruptcy, demand for its B-rated 11.75% bonds due in 2014 was so great on Sept. Blockbuster is approximately where buggy whip manufacturers were exactly a century ago.
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