goatfarmer

Number of Distressed Bonds Rising at Rapid Rate

No surprise that the distressed category will be the first to suffer in a credit krunch. The more interesting category is the junk bond fund, many of which are now yielding 9% and above. (HIO, JPS, DIV, EAD, COY, etc). These funds are wel diversified, such that default by one or two bonds wouldn't make too much of a dent in the portfolio. But they took a bid slide in mid-August, dropping as much as 30 or 40% from highs in June. Many are recovering fast. EAD jumped 6% yesterday. Most unusual for a bond fund. It will be interesting to see how this group fares over the next six months.