Junk Bonds

ALSO NOTED: Lehman trims estimates for Goldman Sachs, Morgan Stanley; Bank of America sells $2.7 billion in securities; and muc

Wed, 21 May 2008 06:59:50 -0400

Company News:
> Bear Stearns memorabilia goes on sale internally. Article
> Sovereign closes $1.9 billion in stock and bonds. Article
> Lehman trims estimates for Goldman Sachs, Morgan Stanley. Article
> Bank of America spends more than $1 million lobbying in the first quarter. Article > JPMorgan Chase keeping half of Bear Stearns jobs. Article
> Wachovia inks deal with TheMarkets.com. Article
> Bank of America sells $2.7 billion in securities. Article
> Fifth Third hit by hedge funds woes. Article

Industry News:
> Junk bonds rallying. Article
> Hedge funds take on CSX. Article
> Oil settles just shy of $130 a barrel. Article
> Fannie Mae CEO still bearish on home market. Article

And Finally... Court ruling: Paper money discriminates against the blind. Article

The past, present and future of junk bonds

Mon, 05 May 2008 06:59:58 -0400

There's been a good deal of debate about the role of junk bonds in the ongoing credit crunch. Martin Lipton says the junk bond is the fount of it all. A Financial Times columnist weighs in, seeming to agree more with Lipton. One of his points is that we still do not know whether the high-yield market is in a for a really nasty spell. What if a recession really kicks in? What if companies really start to default (unthinkable a few years ago)? For the moment, there seems to be a mild resurgence in the market. First-quarter volume ticked up a bit. But hey, as the column points out, at least the ratings of high-yield issues reflect the reality of the risk. Then again, there may be some bargains to be had in distressed credit beyond leveraged loans. We'll see.

For more:
- here's the Financial Time column

Battle of legends: Milken vs. Lipton

Tue, 29 Apr 2008 06:59:54 -0400

Martin Lipton, the legendary lawyer, says the financial crisis stems from the invention of the junk bond so many years ago. As the New York Times notes, Michael Milken begs to differ. He tells the paper that junk bonds--as well as all the CDOs that invested in them--have precious little in common with subprime mortgages. And he has a point; one could argue that junk bonds in and of themselves are neither good, nor bad. It's what you do with them. Same goes for securitization. In both cases, there can be excesses. In general, Milken has a lot to say about the mess, including a bit about how more regulation will not help. I find it interesting that he has made himself a revered, somewhat nostalgic feature. Even Rudy Giuliani, the man who put him in jail, agrees.

For more:
- here's the Times article

How much private equity blood will spill?

Tue, 11 Mar 2008 07:59:58 -0400

Blackstone Group's 90 percent plunge in first quarter profits sent another shudder down the spine of the private equity industry. The Carlyle Group's credit fund woes certainly aren't helping things, either. The New York Times suggests that all the top funds are reeling. This brings up the Freescale Semiconductor deal. Recall that in 2006, Blackstone won a bidding war for $17.6 billion, a sum that stunned Wall Street at the time. Now the company is said to be hurting. Its junk bonds have tanked. Demand has fallen. And the future is unclear. The poor economy may start the real bell-tolling for the top firms. If their portfolio companies start failing, it could get very ugly for the entire private equity industry.

For more:
- here's the New York Times article

Related Articles:
Is Blackstone now a buy? Article
Consolidation in the PE industry? Article
PE funds look to SWFs for deal financing. Article
Leon Black suffers most among PE kings. Article
Lehman takes distressed debt plunge. Article
Not surprising, private equity returns slow. Article
Blackstone Group's earnings disappoint. Article