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There were no high-yield defaults in October, bringing the 12-month default rate down to 1.9%,...

There were no high-yield defaults in October, bringing the 12-month default rate down to 1.9%, reports Fitch, but don't be surprised to see a mini-surge in the year's last two months as 5 are already in the pipeline. The easy funding environment has allowed issuers to refinance - helping the default rate in the short run - but at some point, business needs to get better.
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Comments (2)
  • TOPSY45
    , contributor
    Comments (30) | Send Message
     
    For the past two months, countless articles have been written suggesting high-yield corporate bonds were about to tank noting, among other factors, a growing risk of defaults. In short, "the bubble" was about to burst. Well, in the meantime these bonds have been paying their premium returns with spreads that are hundreds of basis points above a true bubble stage. Now is a great time to be in so-called junk bonds. Yes, someday that will not be the case, but in the meantime enjoy the returns.
    29 Nov 2012, 02:29 PM Reply Like
  • MexCom
    , contributor
    Comments (3061) | Send Message
     
    And they have tanked in response to the tout of increased premiums over asset values. But what are they using for their rear view mirror - old Q reports or at best portfolio prints over a month old. Bonds are going up in value and published premium percentages are out of date.
    29 Nov 2012, 03:53 PM Reply Like
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