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"A food fight" for new junk bond offerings is the result of investors' quest for yields as...

"A food fight" for new junk bond offerings is the result of investors' quest for yields as high-yield fund managers struggle to put to work $43.1B of inflows thus far this year. The money is pouring in as debt sales slow - off 54% since May. "Demand is intense," says corporate bond vet Marty Fridson. "It's become tough to buy acceptable quality paper."
Comments (2)
  • At some time in the not too distant future there will be an awesome crash in the high yield space.

     

    It will be quite ugly.
    6 Aug 2012, 11:17 AM Reply Like
  • Well, it depends on when you exit the high yield space. It could be quite beautiful. Beauty is in the eye of the beholder.

     

    I do think we are headed towards a severe bond crash considering:

     

    1 - Bonds are returning less every month with some funds approaching rate of inflation even at a high risk profile.

     

    2 - Stocks may not be the greatest in the world, but they aren't falling through the floor.

     

    If the government decides to tax all capital gains as income, then I suspect stocks will become wildly volatile as there will be no value in "buy & hold" and Mutual Funds will have lost a majority of their reason for being. We can expect a shift to individual stocks and even more ETFs.
    6 Aug 2012, 11:35 AM Reply Like
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