Talk:High-yield debt
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I't moving to high-yield debt. - Jerryseinfeld 01:04, 21 Nov 2004 (UTC)
[edit] Worldcom
Worldcom didn't actually use off-balance sheet debt; they classified operating expenses as capital expenditures to boost their reported earnings.
High Yield is less interest sensitive than investment grade partly because they usually contain early redemption features which allows the company who issues the debt to repay the debt early. A good portion of the return is also in the form of repaymeny of principal above par so there is a large element of principal baked into the total return of a junk bond.
[edit] debt
To the uninformed, it is very confusing that the title of the article is not mentioned in the first paragraph. Is "debt" now synonymous with "bond"? I'm in bond then.
- I just took a look, I'm not sure how to rewrite it just yet in a way that makes sense. Do you have any suggestions? By the way, the 2 are synonymous. Bonds are vehicles through which companies raise money by borrowing, just as stocks are vehicles through which companies raise money by selling ownership of the company. Tristanreid 16:38, 15 February 2006 (UTC)
How about calling a 'bond' an "IOU" or "an instrument representing a specific, pre-defined debt agreement". I define debt as a condition of owing on a variety of debts, whereas a bond refers to a specific component within a financial profile. While a bond is surely a form of debt, debt is not necessarily a bond, so I do not see them as synonyms, because although they are both nouns, bond refers to a specific piece of one's debt, while debt is a more encompassing noun or even a condition. A bond is a specific debt clearly defined and arranged by definiton. Its a way to plan your debt so that you and the lender(s) are protected by very specific terms which have now become standardized to the point that our economy considers them a staple of our financial economy.
[edit] Reclassification as a junk bond
The article states "Bonds rated lower than investment grade on their date of issue are colloquially referred to as 'junk' bonds" and states that the interest rate is higher as a result. I'd like to see a discussion of the impact of an investment grade bond being reclassified to junk status, since the interest rate is already fixed at that point. Stracci 14:32, 1 February 2007 (UTC)
Also keep in mind "junk bond" was a smear term used to try and stem off competition from financial centers in the mid-west/south. Sh0t 11:55, 1 May 2007
- I took care of both matters. The non-investment grade bonds are properly known as speculative grade bonds. The effect you mention is in reference to what are called "fallen angels," which is what Milken dealt in before he started organising the issuance of bonds that actually started life as speculative to begin with. JJMcVey 10:52, 15 September 2007 (UTC)
