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junk bond |
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junk bondFixed-interest loan paying an above average level of interest but with a corresponding above-average level of risk. Junk bonds became popular in the USA during the 1980s economic boom. Pioneered by US-born bond trader Michael Milken, they were commonly used to raise capital quickly, typically to finance takeovers to be paid for by the sale of assets once the company was acquired. The problem with this strategy was that, following the takeover, the resulting company was so highly geared that its debt repayments eroded any potential profits. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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Almost a third of European junk bonds are trading at distress levels. on May 5 to junk bond status, citing their gloomy business prospects. BB-plus is S&P's highest junk bond rating; a B-minus rating indicates that if the company suffers a setback in its business, it may not be able to meet its loan obligations. |
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